RCS&RDS has sold Croatian satellite TV platform Digi TV to Vipnet, a subsidiary of Telekom Austria (TA). The price of the deal was not disclosed.
TA, which already owns B.Net, Croatia's largest cable operatior, is planning to extend the channel offering of the acquired operator from the current 60 channels. The Digi TV brand will not be used by the operator.
The Austrian incumbent entered the Croatian pay TV market in June 2011 when it bought B.Net from BEWAG. At the time, B.Net already had a franchise deal with Total TV, the satellite TV platform owned by Mid-Europa Partners, and offered the satellite TV services alongside its cable TV offer. Currently, TA is considering the future of this partnership.
At the end of 2012, Austria Telekom reported 163,000 access lines and 86,800 broadband subscribers in Croatia. The operator also has telecommunications operations in Belarus, Bulgaria, Macedonia, Serbia, and Slovenia. RCS&RDS provides pay TV services in Romania, Hungary, Slovakia, the Czech Republic and Serbia.
Croatia is one of the few countries in Eastern Europe where pay TV penetration is lower than 50 per cent of homes (at the end of 2012 about 40 per cent). Analogue switch-off was completed at the end of 2010 and currently there are ten free DTT channels available nationwide, plus many regional ones. Pay TV penetration has been stuck around the same level since 2010. With challenging economic conditions and fierce competition, pay satellite penetration is seven per cent, while cable is in 10 per cent of homes. The only growing platform in the country is IPTV, with the market leader, MaxTV, from Deutsche Telekom-owned Hrvatski Telekom. At the end of 2010 the company launched a satellite TV service, MaxTV Sat, to complement its IPTV offer by serving rural areas as well.
According to IHS Screen Digest, Digi TV has been losing subscribers since 2009, in spite of a focus on the low-budget segment. As competition is due to grow even stronger with pay DTT from Hrvatska Posta close to launch, RCS&RDS' decision to withdraw from Croatia looks understandable, especially that a considerable improvement of Croatia's ecocomic conditions in the next 2-3 years remains unsure. As to Telekom Austria, the acquisition of RCS&RDS' operation should help B.Net to strengthen its position on the market. The operator will now extend the platform's channel line-up to focus more on the middle sector of the market. As with the acquired platform B.Net will have national coverage, it is likely that the conditions of the franchise with Total TV will be changed.