The news that UPC may shortly exit the Slovenian market comes as something of a surprise but is not entirely unexpected, given current market conditions.
Slovenia is in many respects a unique country: in the communist era, it was the most open region of the most liberal country in the Soviet Block.
Since the collapse of Yugoslavia, which it was fortunate to escape with only a 10-day war in 1991, Slovenia has enjoyed unparalleled political and – certainly until recently – economic stability.
Even in the current global crisis, its GDP per capita (around €18,000 in 2008) remains much higher than elsewhere in the CEE region.
Slovenia’s cable industry dates back to the 1980s and was for a long time largely closed off to foreign investors. This only began to change earlier this decade and was fully confirmed in 2004 when Liberty Global acquired Telemach, a rapidly expanding operator formed by a number of local companies five years earlier.
Since then, UPC Telemach has strengthened its position as the country’s leading cable operator through such key acquisitions as that of Ljubljanski Kabel from Regent Finance in June 2007. However, it has also found itself operating in an increasingly competitive marketplace in which the incumbent telco Telekom Slovenije and such alternative telcos as T-2 and Tus Telekom are key players.
Indeed, Telekom Slovenije has operated a highly successful – and probably Europe’s longest established – IPTV service named SiOL TV since 2003, while T-2 and Tus Telekom are both quadruple play companies.
Slovenia also boasts a dedicated DTH platform named Total TV Slovenije, operated by the incumbent Serbian telco Serbia Broadband (SBB), and also has a single multiplex DTT service.
Given all these factors and the small size of the Slovenian market – it currently has just over 700,000 TV homes, with around 40% receiving cable services – it is perhaps not surprising that UPC has found the going tough.
Focusing on the much larger and arguably more lucrative countries it is present in, such as Poland, Romania, Hungary and the Czech Republic, in these difficult economic times seems to make much more sense.
Yet whatever happens, UPC Telemach, under whoever’s ownership, will certainly remain the number one cable operator in Slovenia for the foreseeable future.
