Macedonia ' s Agency for Electronic Communications (AEC) was unable to complete its auction of a 4G mobile licence owing to a lack of interest from industry players. Although the regulator will modify the terms of the licence in an attempt to drum up interest in the concession, this will require detailed input from market participants and will, therefore, take several months to conclude. The collapse of the auction may be attributable to soft demand for advanced mobile services in Macedonia and BMI believes the AEC will struggle to secure further interest, even if it lowers the starting price for the licence.
Macedonia is keen to be the first Balkan market to make the transition to 4G LTE services , but offered only one 4G licence in August 2012 at a starting price of EUR15mn, despite there being three high-profile mobile network operators already active in the country. Market leader T-Mobile was thought likely to be interested, given its parent's considerable experience in encouraging consumers to use non-voice services elsewhere in Europe, while the interest of Telekom Austria -owned Vip was hard to gauge given that Telekom Austria was distracted by a high-profile change of ownership during Q312.
|Not Yet Ready For 4G|
|Macedonia Mobile Market Trends, 2009-2016|
New data from the AEC show that there were 2.211mn mobile subscribers in Macedonia at the end of Q212. This represented a year-on-year (y-o-y) increase of just 2.0% and sequential growth of a meagre 0.6%. The postpay user base shrank appreciably in Q212, continuing a recent trend wherein customers are forsaking more expensive subscriptions in favour of lower monthly prepaid services. Consumers are concerned that the eurozone financial crisis will impact on their budgets for non-essential goods and services. 2G/3G mobile subscriptions contracted by 3.0% in Q212, to 372,228, reflecting this uncertainty.
In line with the poor performance of leading indicators in H112, BMI 's Country Risk team recently lowered the forecast for GDP growth in 2012 to 0.3%, from 1.4%. Though our core sce nario is for a rebound in 2013 , we have also moderated our target for growth in 2013 to 2.7%, from 3.1%. Despite the downgrades to our short-term forecasts, we retain our expectations for robust economic growth in the medium term.
BMI 's Telecoms Research team therefore expects a recovery of confidence in the mobile broadband sector to take place in late 2013/early 2014, but , under the prevailing conditions , it will be difficult for the regulator to solicit genuine interest in a 4G licence at a time of economic cooling and an obvious lack of commitment to expensive mobile broadband platforms by consumers.
When the recovery does come, we again expect T-Mobile and Vip to be interested in bidding for 4G spectrum and operating licences, but we believe that making more licences available will instil greater confidence in the market rather than asking operators to fight over a single concession, regardless of the relative cheapness of the licence. On a related note, Telekom Slovenije (owner of ONE) has just affirmed its intention to remain in the Macedonian market despite the current slowdown.