"Latvia Telecommunications Report 2014" is now available at Fast Market Research

Latvia slipped several places down BMI's Risk/Rewards Ratings table for the Central and Eastern European telecommunications sector. There are numerous reasons for this, but the most significant include saturation of the mobile market, a non-competitive fixed-line voice and broadband market, low consumer spending with regards to services including telecoms and TV and the continued reluctance on the part of the government to distance itself both from the primary legislator and the leading service provider.

There are opportunities to be exploited, in particular growing interest in multi-play services and the recent merger of Baltcom and Izzi Group could yet lead to the long-awaited creation of a dynamic rival to incumbent Lattelecom. However, much depends on the willingness of investors to fully commit to overhauling the resulting entity and on the government to push for reforms that make it easier and more cost-effective for alternative players to access utilities' networks.

Full Report Details at
- http://www.fastmr.com/prod/754591_latvia_telecommunications_report_2014.aspx?afid=302

* There were 2.781mn mobile subscriptions at the end of 2012, a figure BMI forecasts will rise to 2.906mn by the end of 2013. This represents y-o-y growth of 4.5% and a penetration rate of 141.7%. * 4G services are being rolled-out, but the relatively high costs are likely to have weighed in rapid adoption, particularly while 3.5G upgrades are still being deployed. * Broadband subscriptions numbered 1.584mn in 2012, a figure BMI forecasts to rise to 1.790mn in 2013, driven largely by fibre and mobile broadband services. The merger of Baltcom and Izzi has the potential to deliver some upside in the medium to long term, but questions remain concerning shareholders' long-term commitment.

Key Developments

The long-awaited merger of Baltcom and Izzi Group has the potential to improve the dynamics of this saturated and lacklustre market. The merger brings increased market reach to the enlarged entity, as well as pooling the component players' diverse content portfolios. Recent investments in next generation technology leaves Baltcom in a strong position to develop compelling triple- and quadruple play offers that would challenge incumbent Lattelecom. Baltcom's acquisition of 2.6GHz spectrum also gives it a more credible position in the mobile market, although BMI is not convinced Baltcom's shareholders are sufficiently willing to risk a full-on challenge to the incumbent. While Lattelecom also lacks a direct presence in the mobile market (it owns a minority stake in LMT), it has invested heavily in fibre-to-the-home (FTTH) and Wi-Fi hotspots and continually enhances and refines its pay-TV proposition. Baltcom will certainly find the next few years full of technical and business challenges.

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