Luxembourg telecoms market
Having only established full independence in 1867, Luxembourg is one of western Europe’s youngest countries and its only remaining sovereign grand duchy. Its geographical position, as well as its previous status as a tax haven, has led this tiny nation to boast one of the highest standards of living in the world.
Luxembourg’s telecoms market has also fared relatively well in recent years, in part because it hasn’t experienced such a heavy decline in fixed-line revenue since 2009 as other markets. In addition, investment since 2008 has grown in spite of the unfavourable global economic conditions.
One of the largest issues facing the country’s telecoms market is the privatisation of state-owned incumbent P&T Luxembourg. It is one of the last remaining examples in Europe of a state owning 100% of an incumbent and has had an obvious impact on competition in the domestic market.
Henry Lancaster, senior analyst for Europe at BuddeComm, said that there is “no reason to expect a change to the status quo” under the present government, headed by the Christian Social People’s Party.
Elections are not expected until 2014 and given that Luxembourg’s economy grew by 3.6% in 2011, there is no economic necessity to pursue privatisation of its telecoms market.
Luxembourg is the only country in the EU where the regulator does not fix wholesale prices for DSL access, allowing P&T to dictate terms. The company only introduced wholesale broadband access products in 2005, but has since consistently reduced the pricing of its retail broadband offerings in order to undermine competitors.
Both the fixed and broadband markets are led by P&T, which holds 62.4% of retail subscribers. Alternative operator Cegecom, a subsidiary of Artelis, provides some competition for P&T in the sector, offering cable, DSL and WiMAX services. Tango also provides DSL and cable TV services on top of its mobile offering.
Another competitor, Telecom Luxembourg, aims to be the country’s first private global operator, utilising fibre and data centre services. Telecom Luxembourg’s COO, Vincent Nicolay, said that it is “very difficult” operating in a market with such a dominant state owned incumbent but insisted that the company had enough differentiators to compete effectively.
Luxembourg overall faces challenges similar to many developed markets with further investment required in fixed and mobile infrastructure to accommodate growth in data traffic, with LTE considered crucial for all market players.