Last week the Croatian Post and Electronic Communications Agency (HAKOM) released a media statement in which they- presented results of their latest research on the Croatian telecommunication market and the changes occurred during Q3 2019. As a result, we bring you an overview of some key market trends.
During Q3 investments into mobile networks continued. During the first nine months total investments into mobile networks rose 40% YoY. Note that this increase can be attributed to the distribution of additional radio frequency spectres. Meanwhile, although investments into fixed network are lower than last year, it is encouraging to see rising investments into fibre optic cables. As a result, the number of FTTX ports rose by 30% YoY.
Turning our attention to the number of users, at the end of September 2019, there were 1,156,424 broadband connections in fixed networks, which is roughly 4% more than in the same period last year.
Number of Fixed Broadband Lines
At the same time the number of mobile telephony services subscribers rose by 1.3% YoY and amounted to 4,604,635.
Total Number of Mobile Telephony Subscribers
When looking at the amount of revenues generated, all fixed and mobile services recorded a 0.3% YoY increase in revenue. At the same time, total revenues from mobile telephony services declined slightly, driven by lower roaming revenues from domestic users in international networks and roaming of foreigners in national networks. Note that total roaming traffic is higher, but revenue is lower due to a fall in roaming prices in national and international networks.
Growth is also continually recorded in the pay-TV broadcasting market, with 56% of households using this service. IPTV is still the leading technology with a market share of about 52%of the total number of pay TV users, and the development potential of this part of the market is still significant.
Market share wise, Croatia has been witnessing a rather stable market for several years with HT dominating over their competitors with a market share of roughly 46%.
Market Share of Croatian Telecom Operators (%)
Petrol’s Supervisory Board Approved the business plan for 2020 which envisions sales to amount to EUR 6.4bn, EBITDA 214.8m and net profit EUR 109.8m.
Petrol has been at the centre of many scrutiny lately as the Supervisory Board terminated the mandated of the company’s Board due to the disagreement with their future investment and indebtedness projections.
However, last week the Supervisory Board approved the business plan for 2020. According to the plan, Petrol is envisaged to record EUR 6.4bn in sales. This represents a 14.3% increase when compared to the company’s guidance for FY 2019.
Petrol’s Sales (EUR m)
According to the report, the Petrol Group will achieve the results planned for 2020 by selling 3.4m tons of petroleum products, 199.6k tons of liquefied petroleum gas and 19.3 TWh of natural gas as well as through the sale of merchandise and related services totalling EUR 467.6m, through electricity production, trading and sales and through energy and environmental services.
The number of service stations is also expected to rise during 2020. According to the plan the number of service stations incorporated into the retail network will increase by 14, thus at the end of 2020, the Petrol Group’s retail network will consist of 522 service stations, of which 319 in Slovenia, 115 in Croatia, 42 in Bosnia and Herzegovina, 20 in Serbia, 15 in Montenegro and 11 in Kosovo.
Petrol’s EBITDA (EUR m)
Petrol’s EBITDA in 2020 is planned at EUR 214.8m which represents a 15.2% increase when compared to the guidance for FY 2019. The report states that 51% of the projected EBITDA will be generated through petroleum product sales, 20% through merchandise sales and related services, 12% through energy and environmental solutions, 9% through LPG, 5% through the sales of and trading in other energy products, and 3% through renewable electricity production.
Petrol’s Net Profit (EUR m)
Finally, the bottom line is expected to amount to EUR 109.8m, 13.5% higher than the 2019 guidance.
Turning our attention to the balance sheet, the Management plans on keeping a relatively low amount of debt as the company’s net debt/EBITDA is projected at 1.7x.
Last week INA released a statement in which they announced that the Supervisory Board has granted its prior agreement for the Rijeka Refinery Residue Upgrade project.
This investment is increasing the overall efficiency and complexity of the Rijeka Refinery and it is a significant part of the INA Downstream 2023 New Course transformation program, which is aimed at turning INA’s Refining and Marketing segment into a sustainable and profitable business. As a reminder, under the Downstream 2023 New Course program, the refinery in Rijeka would remain functional and the Group would install a DCU (Delayed coker unit) which will cost roughly USD 550m. The main opportunity here lies in the newly introduced IMO 2020. The IMO 2020 is a regulatory requirement set by the International Maritime Organisation which mandates ships to emit less sulphur dioxide by only using fuel oil with less than 0.5% sulphur content (vs 3.5% currently). Due to the regulation one could expect an increased refinery utilization and throughput in order to produce more low-sulphur fuels.
According to the statement, the total investment budget amounts to around HRK 4bn and includes the Residue Upgrade unit, the reconstruction of existing refinery units as well as a new port with closed petroleum coke storage.
The Residue Upgrade unit, using delayed coker technology, will improve the product structure of Rijeka Refinery by increasing the share of profitable white products, i.e. motor fuels and its commissioning is expected in 2023.