Croatian regulator to bundle UMTS and GSM concessions

7 May 2003

The Croatian Institute of Telecommunications (CIT) has announced plans to award the country’s first UMTS licences before the end of the year and has invited telcos to submit their applications for four available concessions. The CIT had originally intended to issue 3G licences in the second half of 2002 but the ongoing malaise in the sector led it to postpone the sale. The adjournment followed an abortive attempt to issue a third GSM licence the previous year, leading telecoms minister Roland Zuvanic to state that the 3G tender would also include provisions to introduce fresh competition to the GSM market. Now, in addition to the UMTS sale the Institute is looking to offer three GSM licences and has said that it will prioritise tenders by those bidding for both 2G and 3G concessions, which it is offering at a discounted price. The cost of a combined GSM/UMTS licence has been set at HKR172 million, with an additional annual fee of HKR12 million, whilst individual concessions are priced at HKR105 million and HKR130 million for GSM and UMTS respectively.

Analysts have already voiced concern that the licences are priced too highly, whilst many have observed that if a single GSM concession was a hard sell in 2001, getting rid of three just two years later will prove more difficult still. Croatia is currently home to two digital mobile networks, Cronet and VIPnet, each backed by major worldwide market players. Cronet is a subsidiary of national PTO Hrvatski Telekom (HT) itself part-funded by Deutsche Telekom, whilst VIPnet is a unit of Austrian wireless operator Mobilkom, backed by Vodafone. With a mobile penetration rate of 52.2% comparing favourably with the eastern European average of 39.5% (end 2002) and a relatively small population to exploit, it is doubtful whether international investors would be willing to spend heavily to gain a toehold in such a limited market. The two incumbents have both confirmed that they will bid for UMTS licences.

CIT's Datafile of Eastern European Telecommunications