Institute of Economics, Zagreb: Hrvatski Telekom is the largest private investor in the digitalization of Croatia

6.9.2019

By accelerating investments in the future, we will create an environment for more innovation and new opportunities that digitalization brings for all Croatian citizens

• In 2018, HT Group made a direct contribution with 3 percent to Croatia's GDP, with even greater indirect contribution
• Hrvatski Telekom is committed to further accelerate investments in technologies that would allow all citizens to live better already today - impact of investments will be even stronger in case of parafiscal charges reduction
• HT investments enabled HT to offer home Internet speeds of over 20Mbps on almost complete households footprint with recent introduction of a hybrid fixed-mobile solutions

Kostas Nebis, CEO of Hrvatski Telekom

Hrvatski Telekom is the largest private investor in digital infrastructure in Croatia and makes a strong contribution to the digital transformation of the country, as shown by the Digital Atlas publication presented today in Šibenik by Maruška Vizek, Director of the Institute of Economics, Zagreb and the Management Board of Hrvatski Telekom, headed by Kostas Nebis, CEO.

In 2018, the HT Group made a direct contribution with 3 percent to Croatia's gross domestic product (GDP) and directly employed 5,000 people. Indirectly, the contribution was significantly higher. The calculation in the Digital Atlas suggest the HT Group contributed directly and indirectly with HRK 11.3 billion in induced GDP last year, created 30.2 thousand jobs and generated HRK 3.26 billion in taxes and social contributions. The HT Group's absolute contribution to the Croatian economy is continuously growing thanks to the company's strong investment cycle and digital transformation.

With smart investment in digital infrastructure, Hrvatski Telekom has enabled the company to increase its gross value added from HRK 8.95 to HRK 9.77 billion in the three years from 2015 to 2018, or 9.2 percent, an absolute contribution to GDP, by 7.8 percent, a contribution to the total number of employees in the economy by as much as 11.1 percent and a contribution to budget revenues by 2.5 percent. As noted in the presentation of the Digital Atlas, all this was achieved despite the significant decrease in the prices of telecommunications services of Hrvatski Telekom during this period.

Reducing parafiscal charges particularly right of way, would accelerate Croatia's digitalization

'We see our role as a game changer in the Croatian society, bringing the benefits of digitalization to everyone so that they are able to make the most of their lives. In last four years, we have invested more than HRK 7.5 billion in Croatia's digital infrastructure so that everyone in Croatia could take advantage of the opportunities modern technology provides. We have the best network in Croatia and among the best in Europe. Thanks to the advanced infrastructure and the digital solutions we develop, we enable everyone in Croatia enjoy the benefits of a truly liberated internet, help businesses be more productive and public sector offer better quality services to the citizens. We want to invest more in technologies such as optics and 5G that can accelerate country's digitization to effectively compete with the digital front-runners of the world. To achieve this, it is necessary to improve the business environment for investing in digital infrastructure, to reduce parafiscal charges particularly right of way fees. In HT, we commit that every kuna saved in fees will be re-invested back in infrastructure. By doing so, we want to support Croatia on its path to development in a digital economy and create a world of better opportunities for all citizens', said Kostas Nebis, CEO of Hrvatski Telekom.

The results Hrvatski Telekom achieved so far in the digitalization of the country are significant. The company was among the first telecoms in Europe to introduce 1 Gbit/s Internet speeds, the first in the region to launch a commercial network for connected NB-IoT devices, digitalized more than 30 percent of domestic businesses and virtualized more than 25,000 jobs. Hrvatski Telekom has also built the largest cloud infrastructure in Croatia and implemented over 10 large projects in the Smart Cities segment.

Internet speeds support productivity growth, salaries, and exports

The Digital Atlas has shown a strong direct positive impact of increasing Internet speeds on business and on the digital transformation of Croatian companies. In the last 5 years, the average available speed of Hrvatski Telekom's fixed internet has increased by 106 percent, and the effects of such an increase on companies across Croatia have been calculated by experts of the Institute of Economics.

The Digital Atlas shows that doubling the speed of fixed Internet achieved by Hrvatski Telekom within 5 years results in the establishment of an average of 10 new companies in the average local government unit and the creation of 811 new jobs. Also, doubling the speed of fixed Internet increases the productivity of companies by an additional HRK 364,400 per employee and generates HRK 420 million in new export revenues. When the spatial spillover effect of the positive impact of increasing internet speed among local government units is also taken into account, the effects are significantly higher.

The director of the Institute of Economics, Zagreb Maruška Vizek emphasized: 'The results of the study suggest the increase of available Internet speed, as a result of Hrvatski Telekom investments into the fixed network, has larger positive effect on business performance of domestic enterprises in Croatia when compared to foreign-owned enterprises. In addition, the increase of available Internet speed has a more favourable impact on productivity of enterprises in underdeveloped areas of the country and facilitates digital entrepreneurship as it induces the establishment of new digitally intensive companies.'

Vizek also presented the results of evaluation of wider economic benefits of reducing parafiscal charges related to digital infrastructure and investing the freed-up funds into infrastructure: 'By decreasing right of the way and spectrum charges by 50 percent and investing it in fixed and mobile network, these investments would each year induce 215 milion kuna in gross value added, 933 jobs and 74 milion kuna in taxes.'

The new technology raises speed up to 30Mbit/s

Every year, Hrvatski Telekom invests 25 percent of its total revenues in infrastructure and technology, well above the European industry average. In the last 4 years alone, the company has invested more than HRK 7.5 billion, which is the value of four Pelješac bridges, the most in the modernization of fixed and mobile networks. The process of modernization of the entire mobile network is underway, as part of which 75 percent of the network has been modernized so far, and by the end of the year, all 2000 base stations will be modernized. This means that by the end of the year, the entire mobile network of Hrvatski Telekom will have LTE technology, which means it will provide users with superior mobile internet experience. It is also heavily investing in 5G technology. At this moment, Hrvatski Telekom has 10 5G locations in the test phase, and the tested speeds exceed 1 Gbit/s. In the fixed network, Hrvatski Telekom continues to invest in the FTTH fiber-optic network, which will cover 277,000 households by the end of the year (fiber to the home) and this number is continuously growing. In case the business climate for investing in digital infrastructure improves, Hrvatski Telekom estimates that as early as 2023, fiber-optic can cover over 1.5 million households in Croatia.

Hrvatski Telekom does not stop raising the internet speed across the country. Introducing a hybrid solution that combines fixed and mobile network has multiplied the minimum internet speed in rural areas of the country. Thanks to innovative technology, Hrvatski Telekom offers users a minimum internet speed of up to 30 Mbit/s, and almost 70,000 users have recognized the advantages of the solution so far.