Finland Telecommunications Report Q1 2012

In this quarter's update of BMI's Finland Telecommunications Market report, we have extended our forecasts for the country's fixed-line, broadband and mobile telephony sectors through to 2016. We have also taken the opportunity to integrate new market data from the regulator, FICORA, regarding the fixedline market, which appears to be declining at a faster rate than expected. Some minor adjustments have been made to our mobile and broadband forecasts as operators' growth in these areas during Q311 were broadly within expectations.
The fixed-line market is now believed to have declined by 14.7% in 2010, much faster than previously reported and faster than the decline in previous years. Data covering the period through to June 2011 suggest an even faster rate of decline, which is borne out by Q311 data from the three largest players:
TeliaSonera, Elisa Communications and DNA (the fourth operator, Finnet Group, does not disclose subscriber numbers). We now expect the number of fixed-line connections to fall below 1mn before the end of our forecast period. By 2016, there will be 981,000 lines in service, a penetration rate of 17.9%. Key operators have, for some time, been saying that they are forsaking investment in traditional fixed-line platforms in favour of wireless and fibre technologies as Finns increasingly turn to broadband for their communications needs. xDSL remains the primary means of fixed broadband access, but demand has slowed as traditional copper access lines are abandoned and the emphasis has switched to wireless. Here, mobile broadband dominates, accounted for 1.8mn subscribers by June 2011. Operators are rapidly deploying HSPA/HSPA+ upgrades, allowing data transfer rates of up to 42Mbps, while also beginning to roll out fourth-generation (4G) networks based on the LTE technology standard. We therefore expect mobile to drive broadband uptake over the coming five years and forecast 4.67mn broadband subscribers by 2016, a penetration rate of 85.3%. IPTV services are increasingly being deployed as an incentive to keep customers to fixed connections, but uptake has been poor due to the highly cabled nature of the Finnish pay-TV sector.
The mobile sector itself continues to have robust growth rates, although TeliaSonera's net losses have been mounting in 2011 and it has relinquished its market leader position to Elisa. TeliaSonera's poor performance is indicative of the highly saturated nature of the market and we expect to see a fairly rapid slowdown in customer addition rates from 2012. Efforts to shed low-value prepaid customers in favour of focusing on more valuable postpaid subscribers appears to be reaping rewards, as data service revenue continue to grow. However, regulator-imposed mobile termination rates (MTR) and interconnection charge reductions are mostly offsetting those gains. It will be another two or three years yet before conditions truly favour the new focus on postpaid and non-voice services. By 2016 we forecast there will be 10.059mn mobile subscribers, of which 4.698mn will be on 3G services.

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Executive Summary 5
SWOT Analysis 6
Finland Mobile SWOT Analysis 6
Finland Wireline SWOT Analysis 7
Finland Political SWOT 8
Finland Economic SWOT 8
Business Environment Analysis 9
Western Europe 9
Western Europe Risk/Reward Ratings, Q112 11
Finland 12
Industry Forecast Scenario 14
Mobile 14
Table: Telecoms Sector – Mobile – Historical Data & Forecasts 14
Mobile ARPU 16
Table: Telecoms Sector – Monthly Mobile ARPU (EUR) – Historical Data & Forecasts 16
Fixed Line 18
Table: Telecoms Sector – Fixed-Line – Historical Data & Forecasts 18
Internet 19
Table: Telecoms Sector – Internet – Historical Data & Forecasts 19
Market Data Analysis 21
Mobile 21
Table: Finland Mobile Market, Q110-Q311 ('000) 23
Table: Finland Subscriber Net Additions, Q110-Q311 ('000) 24
ARPU 25
3G Services 27
4G Services 29
Mobile Network Investment 31
Mobile Contract Wins 32
Table: Mobile Contract Wins 32
Mobile Operator Data 33
Table: Finland Mobile Market Overview 33
Table: TeliaSonera Mobile 33
Table: Elisa Mobile 34
Table: DNA 35
Mobile Content 36
Regional Outlook 36
Table: Smart Meter Race Is On 40
Country Outlook 40
Table: Finland Mobile Value-Added Services Traffic H208-H111 42
Value-Added Services Timeline 43
Table: Selected VAS Services 43
Fixed Line 44
Fixed Line 44
Market Value 46
Internet 46
Table: Growth Of Fixed Broadband Market By Type Of Connection, 2008-2011 (‘000) 47
Other Developments 49
FTTH 50
IPTV 50
WiMAX 52
Wireline Contract Wins 54
Table: Wireline Contract Wins 54
Regulatory Environment 55
Overview 55
Table: Finland: Regulatory Bodies And Their Responsibilities 55
Legislation 56
Interconnection And Access 57
Recent Developments 57
Wholesale Broadband Pricing 58
Competitor Analysis 60
Market Overview 60
Key Players 60
Table: Key Players: Finland Telecoms Sector 60
Company Monitor 61
Security and Machines - Gemalto Product Portfolio Ready For The Future 61
Table: Recent Contracts, Gemalto 64
Company Profiles 65
TeliaSonera Finland 65
Elisa Corporation 69
DNA 74
Finnet Group 78
Regional Telecommunications Penetration Overview 80
Fixed Line 80
Table: Regional Fixed-Line Penetration Overview 80
Internet 81
Table: Regional Broadband Penetration Overview 81
Mobile 82
Table: Regional Mobile Penetration Overview 82
BMI Methodology 83
How We Generate Our Industry Forecasts 83
Table: Key Indicators For Telecommunications Industry Forecasts 83
Telecoms Business Environment Ratings 85
Risk/Reward Ratings Methodology 85
Table: Ratings Indicators 86
Weighting 87
Table: Weighting Of Indicators 87
Sources 87
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