BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Lithuania

BMI has made upward revisions to forecasts for broadband growth in Lithuania, while forecasts for the fixed-line market have been lowered. Although the number of active mobile users declined marginally (0.1%) in Q206, the market picked up again in Q3. We are therefore holding fast to the revised forecasts made in our Q3 report, when we made comprehensive revisions to count only active subscribers in our analysis of the mobile market. Despite this, mobile penetration is set to rise to 135% by YE06, the highest in the region.

All sectors of the broadband market are showing growth, which is particularly strong in the DSL market. This market is dominated by incumbent operator TEO, which has come under fire from the Competition Council for abuse of its dominant position. TEO must now offer wholesale services to alternative operators under the same terms it provides services to itself, which BMI believes will lead to greater competition in the market as operators lower prices in the battle for subscribers, particularly in the strong pre-Christmas period. TEO itself recorded strong growth in its ADSL customer base, fuelled by the August launch of VoIP services offering free calls between its broadband users. We anticipate the October introduction of IPTV services will provide a further boost to its broadband subscriber base, and have raised forecasts for the market upwards. We now expect broadband penetration will rise to 12% by YE06, increasing to nearly 25% by 2010.

In contrast, the fixed-line market is declining more swiftly than anticipated, and we now expect penetration will dip below 23% by YE06. TEO continues to record falling subscriber numbers, and in Q306 the first signs of slowdown in the number of subscribers to its call packages was recorded. These losses are not being offset by gains at triple play operators, which in BMI’s opinion is due to the highly fragmented nature of the cable TV market. Nearly 50 operators provide services to less than 340,000 subscribers, with only 25% of Lithuanian households taking pay-TV services. There is a significant market potential, but we believe TEO will be better placed to take advantage with its new IPTV and digital TV services, rather than the small, privately-owned cable operators.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-Line

Table: Lithuania Telecoms Sector Fixed-line Historical Data & Forecasts

Internet

Table – Lithuania Telecoms Sector Internet Historical Data & Forecasts

Mobile

Table: Lithuania Telecoms Sector Mobile Historical Data & Forecasts

Chapter 3 - Macroeconomic Climate

Household Spending Soars In Q106

Table: Indicators Of Economic Activity

Activity To Remain Robust In The Short Term

Medium-Term Outlook: Strong, But Moderating Growth

Chapter 4 - Country Snapshot: Lithuania Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 - Business Environment

Emerging European Markets

Lithuania

Lithuania Telecoms Industry SWOT Analysis

Chapter 6 - Competitive Landscape

Market Structure

Table – Key Players: Lithuania Telecoms Sector

Table: Selected Operators Sales Data

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 – Lithuanian Cable TV and MMDS Market, Q106

Internet

Table – Lithuanian Broadband Market, Q106

Mobile

Table – Lithuanian Wireless Market, Q106

Table – Lithuanian GPRS Market, Q106

Industry Developments

Chapter 7 - Company Monitor

Regional Case Study: Nokia

Table: Nokia Key European Network Contracts

Profiles

TEO (formerly Lietuvos Telekomas)

Omnitel

Bité Lietuva

Tele2 Lithuania

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

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:.