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Luxembourg - Telecoms, IP Networks, Digital Media and Forecasts
Market Briefing
Published: August 2010
Pages: 35
Tables: 45
From: GBP 289.00 Buy Now!
Research from: Paul Budde Communication Pty Ltd.
Sector: Broadband & Fixed
Executive summary
Luxembourg has one of the smallest telecom markets in Europe, greatly supported by an influx of workers and migrants from larger neighbouring countries. Luxembourg City is also one of the political centres of the European Union, and so attracts affluent migrant employees.
The incumbent P&T Luxembourg retains a dominance in the fixed-line and broadband sectors which has become unusual in Europe. Despite regulatory attention in recent years, competition in the broadband market has been hampered by high very costs for local loop unbundling and shared-access offers. As yet, there are few broadband subscribers on fibre networks – alternative operators do not yet have access to P&T’s fibre network, which has implications for their competitiveness in the provision of services, since a growing number of new-build areas of Luxembourg City are equipped with fibre only. Given the slow regulatory pace, alternative operators will be considerably disadvantaged when remedies come into play since P&T would by then have had time to consolidate itself as the first market player and thus have taken a lion’s share of potential subscribers.
Nevertheless, the government has continued to push for fibre development to improve Luxembourg’s connectivity. Its wholly-owned fibre operator, LUXConnect, set up in 2006 to provide dark fibre to other operators on a wholesale basis, began offering services during 2009. As part of a package of measures to address the economic downturn, and to accelerate the development of fibre infrastructure, the government decreed that LUXConnect must invest €100 million to 2012. In addition, the State renounced its dividends from P&T for the 2009 financial year so that the company could invest a further €74 million in fibre over and above its existing investment. The government aims for complete FttH coverage in Luxembourg by 2018.
In common with most other markets, revenue from the fixed-line sector has been falling steadily. Indeed since 2005 income generated by mobile telecoms has far exceeded income from fixed lines, while revenue from the broadband sector has propped up total revenue.
Total investment in fixed-line and mobile infrastructure reached almost €124 million in 2009, showing only a 2.2% growth year-on-year. Given the continuing constraints in financial liquidity it is unlikely that significant growth in investment should be expected until 2011 at least. Furthermore, investment growth has been curtailed by Luxembourg’s general economic slump, which saw GDP fall 4.2% in 2009. Nevertheless, economic recovery is anticipated to strengthen in 2010, while GDP growth of 2.1% is expected for the year. Most investment has been in the fixed-line sector as P&T shows its commitment to FttH and FttC network upgrades. Mobile operators have also concentrated on network upgrades to provide mobile broadband connectivity to subscribers.