Line Break

The global recession has taken a toll on many sectors, howeve, one that is proving admirably resilient is the telecoms sector.

More & more people are buying mobile phones or going online & one of the fastest growing areas is Eastern Europe and the countries of the former Soviet Union (CIS) A new report by the UN’s trade body, UNCTAD, states that there were 4 billion mobile-phone subscriptions globally at the end of 2008.

Growth had slowed a little compared with 2007, but remained close to 20%, with penetration rising most in developing & emerging market economies.

“Between the years 2003 and 2008 many of the top 20 performers in terms of increasing the level of mobile penetration are found in transition economies, as we call them, the former Soviet republics, and also many of the new EU members figure among the biggest or most dynamic economies in this context,” says Torbjorn Fredriksson of UNCTAD, who coordinated the report. “This very much reflects the fact that a mobile telephone today is seen no longer as a luxury item but really as a necessity, people don’t want to give up their subscriptions once they have them”

The region’s (surprise) star performer was Montenegro. Last year it had more than 230 mobile-phone subscriptions for every 100 inhabitants, a rise of 160% in just five years.

In Russia & Ukraine, mobile penetration more than doubled in the same period (132 subscriptions per 100 inhabitants for Russia; 120 for Ukraine).

Armenia outperformed its Caucasus neighbors with growth of 83%, compared with 70% for Georgia and 55% for Azerbaijan, at the other end of the scale, Turkmenistan was the regional “laggard” with 21 percent growth.

Fredriksson says some of the growth in the former Yugoslavia reflects the freeing of pent-up demand, as a lot of investment has come into the telecoms sector from foreign networks after the wars of the 1990s, which also explains the rapid increase in the number of Internet users in those countries.

Among the world’s top 20 performers were Bosnia-Herzegovina, where Internet penetration rose 21% from 2003-08, as well as Macedonia & Moldova.

The report says there were 1.4 billion Internet users around the world by the end of last year, up around 15 percent on the previous year. Fredriksson says transition economies are in a relatively good position to do that, thanks to a largely well-educated population and the proximity of major developed markets, leading him to expect “rapid growth” in broadband access in the next few years.

“If you look at the transition economies, the highest level is seen in Croatia with 11 percent, in Macedonia with 8 percent, and Russia with 5 percent, so you can see there is still big potential for expanding these penetration levels,” Fredriksson says.

So we will be rolling into another round of telco consolidations in the Balkans & SE Europe by the looks of things.