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Željko Lukač, Metronet - presentation from TMT.Ventures'08 Zagreb (http://tmtevents.eu by New Europe Events)
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page 1
Investing in Video, Data and Voice services in Croatia
strana 2
Content
1. Market overview
2. Metronet at glance
3. Key success factors
4. Investment opportunities
page 3
Market overview
Video Video market in Croatia has low level of penetration
and is dominated by two major providers. Video penetration is relatively low - only 10%,
compared with CEE average of 32%
Data (Internet) Broadband Internet and corporate VPN penetration
still significantly lag behind EU counterparts.
Broadband penetration stands at 10%, compared to
EU average of over 50%
Voice Both fixed and mobile penetrations in Croatia are
relatively high and currently stand at:
– 119% Mobile
– 38% Fixed
74%
15%
49%54%55%58%58%58%
69%
Broadband Internet
% Households
61%
53% 52%
42% 42%
34%
22%
16%
10% 9%
Hungary Romania Germany Slovenia Bulgaria Poland Czechrepublic
France Croatia Spain
CATV Penetration:
% Households
1. Market overview
strana 3
page 4
Video, Data and Voice market overview
Video Video market in Croatia has low level of penetration
and is dominated by two major providers. Video penetration is relatively low - only 10%,
compared with CEE average of 32%
Data (Internet) Broadband Internet and corporate VPN penetration
still significantly lag behind EU counterparts.
Broadband penetration stands at 10%, compared to
EU average of over 50%
Voice Both fixed and mobile penetrations in Croatia are
relatively high and currently stand at:
– 119% Mobile
– 38% Fixed
74%
15%
49%54%55%58%58%58%
69%
Broadband Internet
% Households
61%
53% 52%
42% 42%
34%
22%
16%
10% 9%
Hungary Romania Germany Slovenia Bulgaria Poland Czechrepublic
France Croatia Spain
CATV Penetration:
% Households
Croatian Annual TLC Fixed Spending (HRK Mln)
2006-2012 CAGR%
Source: Metronet estimates based on industry data
Video and Internet services are expected to grow the fastest
Internet services include new L2 MetroEthernet Services and L3 MPLS VPN services
Traditional data is expected to remain on the same level, with further decline expected following presented period. Traditional data includes legacy TDM, ATM and FR technologies.
Fixed voice is also expected to decline due to fixed to mobile substitution and decreasing prices
Total market is expected to grow by 21% between 2006 and 2012 and is expected to reach € 1 bn in annual spending
The Croatian Telecom Market in Brief
CATV: 13%
Wholesale: 7%
Internet: 22%
Traditional data: 0%
Fixed voice: - 4%
3.908
3.043
316
319
769 2.302
824
1.189
285
63
-
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
2006 2012
Fixed Voice Traditional data Internet and VPN Wholesale Video
Croatian telecom market
page 6
Competitive environment
T-Com dominates the competitive environment
Real competition is coming from infrastructure based operators in Data (Internet) and video services, as these operators can compete on quality and not only price
CpS (carrier pre selection) operators cannot be viewed as a great threat to T-Com dominance as they achieve low margins in declining business (fixed telephony) and only serve a purpose of increasing T-Com wholesale business
Video (CATV) market is dominated by cable operators, but incumbent with its IPTV offering is rapidly closing a gap
Metronet, positioned as a business broadband provider, is taking sizable market share from T-Com in Data (Internet) services from corporate customers
Metronet market share of business customers
0
10
20
30
40
50
60
70
80
90
100
KA/LA SME SOHO
Millions HRK
Mo
nth
ly in
co
me
METRONET Ostali Operateri
12%12%
10%2%
Video market share
48%
19%
33%
B.Net T-Com Others
page 7
Market overview
Video Video market in Croatia has low level of penetration
and is dominated by two major providers. Video penetration is relatively low - only 10%,
compared with CEE average of 32%
Data (Internet) Broadband Internet and corporate VPN penetration
still significantly lag behind EU counterparts.
Broadband penetration stands at 10%, compared to
EU average of over 50%
Voice Both fixed and mobile penetrations in Croatia are
relatively high and currently stand at:
– 119% Mobile
– 38% Fixed
74%
15%
49%54%55%58%58%58%
69%
Broadband Internet
% Households
61%
53% 52%
42% 42%
34%
22%
16%
10% 9%
Hungary Romania Germany Slovenia Bulgaria Poland Czechrepublic
France Croatia Spain
CATV Penetration:
% Households
2. Metronet at glance
strana 7
page 8
Metronet is the leading business broadband service provider on the Croatian market
IP-based network totally independent from the incumbent
Metronet was incorporated in May 2005.
Achievements and current results
Metronet has its own network in 36 cities; has build more than 2.600 kilometers of own fiber optic network; direct link through own DWDM to Vienna
Total revenues in 2008. will be over €31mn (kn 225million) - growth of almost 100% from 2007.)
EBITDA positive on monthly basis since April; expected EBITDA result for y 2008. is over €2 million.
More than 2.100 business customers and over 20.000 residential customers.
Mission and Vision
Become the leading business broadband solution provider
Build a relationship with our customers by understanding their needs and delivering broadband solutions that they truly value, and improve their business operations
Become #2 wire-line operator on the market (behind the incumbent)
Metronet – At a glance
Metronet
Investors – Key Success Factor,Instant credibility to Start-up
Top 20 customers
Customer Activities Customer Activities
Development of advanced ICT infrastructure for academic comunity
Metronet's strategic partner and largest distributor of IT equipment and software
Holding company owing major Croatian touristic agency
Leading Croatian bank
Internationaly known copmany that produces transmission lines and substations among other
Largest Croatian food producer and second largest pharmaceutical producer
The largest Croatian insurance company One of top three Croatian insurance companies
One of the major retail companies in Slovenia and Croatia
Largest private company in Croatia and one of the leading regional companies with core business in food and drinks
One of top Croatian banks One of top three Croatian insurance companies
Financial institution for mediation in securities trading, portfolio management for institutional and individual investors
KPMG is a global network of professional firms providing Audit, Tax and Advisory services
Provider of specialized IP services mainly for companies
Leading oil company in CEE and second largest on Croatian market
The largest Croatian touristic agency owned by Emporion d.o.o.
Major international accounting and consulting firm
One of the largest shipping companies One of the largest leasing companies in Croatia
page 9
page 10
Market overview
Video Video market in Croatia has low level of penetration
and is dominated by two major providers. Video penetration is relatively low - only 10%,
compared with CEE average of 32%
Data (Internet) Broadband Internet and corporate VPN penetration
still significantly lag behind EU counterparts.
Broadband penetration stands at 10%, compared to
EU average of over 50%
Voice Both fixed and mobile penetrations in Croatia are
relatively high and currently stand at:
– 119% Mobile
– 38% Fixed
74%
15%
49%54%55%58%58%58%
69%
Broadband Internet
% Households
61%
53% 52%
42% 42%
34%
22%
16%
10% 9%
Hungary Romania Germany Slovenia Bulgaria Poland Czechrepublic
France Croatia Spain
CATV Penetration:
% Households
3. Key success factors
strana 10
Quaestus Private Equity Kapital fund is main investor in Metronet. The Fund is comprised of 9 blue-chip Croatian companies and they are as follows:
General industry1. M San Grupa - #1 IT supplier and System integrator in Croatia. Strategic partner with Metronet.2. Jamnica d.d. – a member of Agrokor group, #1 Water and juices in Croatia
Financial services3. Croatia Osiguranje d.d. - #1 Insurance in Croatia4. PBZ d.d. - #2 Bank in Croatia5. FIMA d.d. - leading financial advisor in Croatia
Construction6. Dalekovod d.d.7. IGH d.d.8. Konstruktor d.d.9. Nexe Grupa
Investors – recognition and support of investors from the beginning of the project was exceptional!
Investors – Key Success Factor,Instant credibility to Start-up
Key success factors of this Start-up: investors, business focus and infrastructure model
are
page 11
Business focus – ability to specialize and provide services and products that matter to this segment
Quality of service and expertize is important to business customers
No distraction from residential sector – new technology
Less financially demanding
Infrastructure based model – IP-based network totally independent from the incumbent
No delays in project completion and connections
Quality of service
Ability to be flexible and provide quick response
Future technology
Investors – Key Success Factor,Instant credibility to Start-up
Key success factors of this Start-up: investors, business focus and infrastructure model
are
page 12
page 13
Market overview
Video Video market in Croatia has low level of penetration
and is dominated by two major providers. Video penetration is relatively low - only 10%,
compared with CEE average of 32%
Data (Internet) Broadband Internet and corporate VPN penetration
still significantly lag behind EU counterparts.
Broadband penetration stands at 10%, compared to
EU average of over 50%
Voice Both fixed and mobile penetrations in Croatia are
relatively high and currently stand at:
– 119% Mobile
– 38% Fixed
74%
15%
49%54%55%58%58%58%
69%
Broadband Internet
% Households
61%
53% 52%
42% 42%
34%
22%
16%
10% 9%
Hungary Romania Germany Slovenia Bulgaria Poland Czechrepublic
France Croatia Spain
CATV Penetration:
% Households
4. Investment opportunities
strana 13
page 14
Investment opportunities
Drivers of demand are evident Low levels of video penetration Low level of Internet penetration Expanding corporate requirements for secure VPN connections
Significant market growth expected a over a coming period
Infrastructure based business models will prevail and will offer a significant investment
opportunities and returns to potential investors
page 15
Metronet telekomunikacije d.d.Ulica grada Vukovara 269d, HR-10000 Zagreb, Croatia, T + 385 1 6327 000, F + 385 1 6327 011, E
