Market Overview and

Regulation in Albania
 Market Trends 2015

1 Revenue growth for the sector (after many years of stagnation)

2 Steady growth of fixed broadband

3 Significant growth of mobile broadband due to 4G

4 Higher substitution of mobile voice and SMS with OTT services

5 Number of subscribers to triple play bundles increased 3 times

6 IPTV important driver for increased broadband connections

7 Fixed telephony subscribers: in decline since 2009

 Market TURNOVER 2015
• Total market Turnover: € 309 mil. • Mobile networks: 2% growth
 2% annual growth  Vodafone, Telekom, EM: 0-2% increase
 Growth after decline since 2009  Plus: 20% growth
(exc.2012)
• Main operators revenues stable • Fixed networks: 2% growth
• Revenue from mobile v fixed  Albtelecom: -4%
networks: 77% v 23%  AO: +22%
Mobile and Fixed operators Mobile Networks
Telekom Albania Vodafone Albtelecom (Mobile) Plus Albtelecom (Fiks) OA Telekom Albania Vodafone Albtelecom (Mobile) Plus

2015 2015

2014 2014

2013 2013

2012 2012

2011 2011

2010 2010

2009 2009

2008 2008

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 - 10,000 20,000 30,000 40,000 50,000
Million LEK Million LEK
 Revenue Market Shares
 MNO-s market shares stable in  Albtelecom market share in fixed
2014-2015 sector declined from 66% in
 62% of MNO investments in 2015 2014 to 59% in 2015
for broadband

Fixed Networks Rev. 2015

Mobile Networks Rev. 2015
ATU
2.28%
Plus
Nisatel Other AO
6.57%
2.42% 10.73%

Albtelecom Abissnet
12.01% 3.41%
ASC
Vodafone 4.79%
47.07%
Albtelecom fix
ABCOM 59.05%
Telekom 17.32%
Albania
34.35%
 Fixed Broadband 2015
 End of 2015: 243 thousands subscribers • International Connectivity: 77Gbps
(61 Gbps 2014)
(QII_2016: 255 thousands)
• Market shares:
 2010-2015: steady annual growth 14- – Albtelecom 40%
17%. – Abcom 21%
• Four main operators:
 8.6% subscribers per population – 84% of the total market
 31% subscribers per Household – Triple play offers (Internet, telephony, TV)

Fixed broadband subscribers and penetration per Market Shares

population 2010-2015
300,000 10%
Albtelecom Abcom Abissnet ASC OA te tjere
9%
250,000 8.6%
8% 100%
7.3% 90% 19% 18% 17% 16% 12% 16%
200,000 7%
6.40% 80% 8% 14%
5.70% 6% 5% 7% 7% 13%
70% 6% 11% 11% 11%
150,000 4.90% 5% 11% 10%
11%
4% 4% 60%
100,000 50% 21% 22% 24% 23% 21%
3%
2% 40%
50,000
1% 30% 59%
0 0% 20% 43% 42% 40% 40% 40%
2010 2011 2012 2013 2014 2015 10%
0%
Subscribers Penetration 2010 2011 2012 2013 2014 2015

5
 Fixed Broadband and IPTV

• Broadband subscribers: + Albtelecom broadband

subscribers
17%
Broadband No bundles Internet + Telephony
Internet, Telephony +IPTV
• Triple Play (Internet, Tel, 120,000

+TV (IP/CATV) subscribers:

100,000
3 times (from 23 thous. To 69
thous.) 80,000

• Albtelecom: increase 4 times

60,000

of triple play ( with IPTV), 40,000

and 63% of total broadband

subscribers 20,000

0
2013 2014 2015
 Fixed Broadband by Technology

Albania EU
1. DSL: 69% (VDSL included)
1.DSL: 63% (FTTN/C 52%) 2. Cable 19%
2. Cable 23% 3. Cable DOC SIS 3.0: 80% of total cable
3. Cable DOC SIS 3.0: 14% of total cable 4. NGA: 35% mostly VDSL, FTTH/B and Cable
4. NGA Subscribers: 63% mostly FTTN/C DOC SIS 3.0

Albania 2015 DSL on 100%

copper line
11%
Other
7%

Cable
23%

DSL on
FTTN/FTTC
FTTH/B 52%
7%
 Fixed broadband by Download Speed

2015 2014
0% 0%
1% 0% 4% 8%
5% 5% 256 kbps up to < 2 Mbps
256 kbps up to < 2 Mbps
2 Mbps deri ne < 4 Mbps
2 Mbps up to < 4 Mbps 4 Mbps up to < 10 Mbps
25% 28%
4 Mbps up to < 10 Mbps 10 Mbps up to < 30 Mbps

10 Mbps up to < 30 Mbps 30 Mbps up to < 100 Mbps

60%
64% 100 Mbps or more
30 Mbps up to < 100 Mbps

100 Mbps or more

• Moving up from 1-2 Mbps to 4-10 • 256kbps-4Mbps: from 36% in 2014

Mbps to 30% in 2015
• 64% of subscribers on 4-10Mbps • Fast (30 Mbps) and ultra fast (100
Mbps): 1% of total connections
 Broadband Prices (PPP adjusted)
Monthly Price Fixed Tel+Internet, 8-12 Monthly Price Fixed Tel, Internet, TV 8-12Mbps
Mbps (EURO PPP) (EURO PPP)
80 100
89
69 90
70
80 76 76
60
52 70
49 60 58
50 46 45 60
43 52
41 49
38 38 37 47 46 45
40 35 34 33
50 44
33 32 39
30 30 30 40 36 35 34
28 27 27 31
30 25 25 24 28 27
22 21 21 30
20
20 17
12 20
10 10

0 0

EE
ES
HR
NO

HU
LV
IS

LU

LT
AL

PL
SI
SK

FI

DK
CY

SE
EU27
 Mobile Broadband 2015
Active users with broadband access 3G/4G
• 4 MNO-s with 3G services and penetration per capita

• 3 MNO-s launched 4G services in 1,600,000

53.5%
60.0%

July-September 2015 1,400,000 49.2%

50.0%
• 2 million users of mobile 1,200,000
43.6%
45.8%

broadband 40.0%
• 1.4 million active users(1.5 milion 1,000,000 35.5%
34.1%
32.1%
Q2 2016) 800,000 30.0%
o 43% Annual Growth: mostly access
from mobile phones 600,000
20.0%
o QIII 2015: 23% growth Impact of 4G
400,000

• 46% penetration per population for

10.0%
200,000

active mobile broadband

users(53.3% Q2 2016)
- 0.0%

• 550 MB average download per user

Celular Devices USB/Modem 10
Penetration per population
 Impact of OTT

Number of active Voice calls:

mobile broadband + 1% 2016/2015
-15% Q12016/Q12015
users: +43%
SMS: -12%

DATA downloaded:
+148% 2014/2013
+103% 2015/2014

Albanian MNO-s are

experiencing the
decrease in voice/SMS Number of GSM
traffic and surge in users(active/SIM):
data traffic +1%/-3%
 Infrastructure
Optical Fiber in Tirana

• Good coverage in main

urban areas with optical
fibers: Tirane, Durres,
Vlore, Shkoder etc
• Many operators have their
own urban/local FO
infrastructure
• Inter-urban area only
Albtelcom and ATU
present
 Optical Fiber: Interurban
• Optical Fiber: all operators • Optical Fiber: All operators except
Albtelecom and ATU

13
Broadband/Infrastructure Market

• Most fixed operators with their own networks

Infrastructure based competition
• LLU not effective
• Bitstream Access:
o Albtelecom has signed agreements with 4
operators
o End of QII_2016 approx.2400 connection
• Passive infrastructure sharing:
o 924 km access to dark fiber (no change from
2014)
o 61 km: access to ducts (19 km in 2014)
• AKEP approved a Regulation for passive
infrastructure sharing in 2015
• MOU for co-investing was signed between
three mobile operators and AKEP on
December 2015.
Market Analysis 2014-2016

Mobile Telephony

Fixed telephony

Broadband
Access & Leased
Lines
 Market 3 and 4/2014

Wholesale
central
access
Wholesal (WCA)
e local
access
(WLA)

Wholesale access
to passive
infrastructure
Wholesale network in
high quality national level
access
(WHQA)
Wholesale Local Access – 3a
Non discrimination

Transparency

Local loop access

unbundling on MSAN level

Access in physic
infrastructure (duct/pole for
connection POI - MSAN

Price control of LLU and

duct access

Vectoring for VDSL ( if it is

applicable)
Wholesale Central Access – 3b
Non discrimination

Transparency of tariffs and

services (their publication)

Obligation for Bitstream

access (Continuance of obligation of
2014 market`s analysis)

Obligation for access in

duct/optic fiber in urban level

Price control of Bitstream and

duct access
Wholesale High Quality Access - 4
Non discrimination

Transparency of tariffs and

services (their publication)

Obligation for leased lines access

access
(Continuance of obligation of 2014 market`s
analysis)

Obligation for leased lines access

in national/interurban
connection and local level
(termination segment)

Price control of leased lines

access
Wholesale Access in Passive Infrastructure Network
in National Level

Non discrimination

Albtelecom
& ATU Transparency of
Price control of tariffs and services
duct/optic fiber
access
Symmetric (their publication)
regulation

Access on duct and

optic fiber in
national/interurban
connection level
 Market analysis (1/2014)

AKEP on October 2015 approved the final document of the "Analysis of the
fixed telephony market: retail markets and wholesale markets of termination,
transit and origination". AKEP decided :

 Wholesale fixed call termination market

o Designation of Albtelecom and all AO as SMP
o FTRs:
• from 1.01.2016 symmetric rates between Incumbent and AO and one
segment (from two);
• glide path in three stages 2016-2018.

 Retail market of Access (market 1/2007) and wholesale Call

origination on fixed networks (market 2/2007):
o no longer susceptible to ex-ante regulation (do not meet the 3 criteria
test) and no SMP operators.
o fixed and mobile calls in the same market (fixed calls high degree of
substitution from mobile calls).
 Market analysis( 2/2014)

4 MNOs SMP
Wholesale Mobile Call Termination

Transparency Non-discrimination Tariff regulation

(RIO publication) Access Cost orientation
Market analysis( 2/2014)
Based on the market analysis, in the recommendation of
Competition Authority and the best practices to address
the “Club effect”, AKEP has imposed additional measures
to reduce/eliminate behaviors with anti-competitive
effect of discrimination in on-net/off-net.
Market analysis( 2/2014)
1. Further reduction of MTRs according to the
benchmark method, using the average MTRs in
BEREC countries that have applied the ‘pure LRIC’
method;
2. Internal non-discrimination in MTRs: prices for
retail on-net calls not lower than off-net retail prices.
 Structure of Calls Originating From Mobile Phones
2013-QII 2016

100%
90%
80%
70%
60%
50% 93%
40% 80%
74% 69% 65% 68% 64%
30% 61%

20%
10%
0%
2013 QIV_2014 QI_2015 QII_2015 QIII_2015 QIV_2015 QI_2016 QII_2016
On net Off net Towards fixed Towards international
,