Bosnia is one of the least developed markets in Central and Eastern Europe, which means there is great medium-term growth potential. Bosnia's mobile market recovered in Q213 and Q313, after a net subscription loss in Q113, confirming our view of continued subscription growth on the back of regulatory measures aimed at boosting competition. We therefore retain our five-year growth forecast for the mobile sector, but caution that regular inactive SIM discounting poses a downside risk to our outlook. Meanwhile, the wireline market is gaining momentum as competition between the incumbent operators and alternative players drives innovation and leads to lower prices. The take-up of mobile data services could however ultimately lower growth in fixed broadband subscriptions, particularly once LTE services become available.
- The mobile market grew by 2.6% q-o-q in Q313, as penetration rose to 87.7%, indicating significant growth potential for operators over the medium term.
- Data from the regulator, CRA, showed Bosnia's fixed-line market to have declined faster in 2012 compared to 2011, with the rate of decline accelerating to 9.8% from 4.5% in 2011.
- We estimate a total of 652,000 broadband subscriptions at end-2013, up 14.7% y-o-y.
Key Trends & Developments
The wireline market is evolving in Bosnia as a result of investments by the incumbent operators and the activities of alternative operators. There has been a spate of acquisition activity in the market, which is resulting in smaller operators making gains and posing an increasing challenge to incumbent operators. Telemach has been active, acquiring Art-Net in March 2013, while Telekom Slovenije owned BlicNet acquired No Limit Technology in December 2013. However, the incumbent operators have also been active, with m:tel reaching an agreement to acquire Logosoft in December 2013, following its proposed acquisition of Elnet. BMI believes consolidation of smaller providers to challenge the incumbents would benefit consumers in terms of price and service quality.
A potential threat to the continued development of the broadband market is the development of LTE technology by Bosnia's leading mobile operators. Telekom Srpske and BH Telecom are leading the race to roll out 4G services. The former announced that it successfully tested its 4G technology initiative in live conditions in May 2013 using equipment supplied by Chinese vendor ZTE. For its part, BH Telecom and Ericsson Nikola Tesla signed an agreement to launch a LTE pilot in August. During the test period, all users within the test zone will be able to access the network with a wide range of data-enabled devices, including smartphones and tablets. The date for the commercial launch of the network would depend on the completion of the installation of base stations as well as the successful completion of the trial.