On January 1st 2023, Albania will have only two mobile operators

Their union will create the largest fixed and mobile services company in the country in terms of the number of customers.

According to the latest data of the Electronic and Post Communications Authority (AKEP), ONE and ALBtelecom at the end of the third quarter of 2022 owned almost 1.8 million active mobile services (more than 52% of total) and 112 thousand fixed Internet service clients (about 20% of the market).

The number of operators on the market will drop from three to two, the lowest number since 2008, when exactly ALBtelecom had started operating on the market through its mobile company, Eagle Mobile.

Consolidation is an increasingly common trend in telecommunications markets in the past decade. This is because smaller operators find it difficult to be efficient in the long term, especially in small-sized markets like Albania. The mobile market is a highly competitive market and the need for investment is large and ongoing.

If we look at the financial indicators of mobile operators in Albania over the past decade, there is an apparent tendency to cut profits even for the largest operators, while smaller operators have consistently resulted in losses.

Based on data from AKEP, the ONE operator closed last year with a significantly lower profit compared to 2020, while Vodafone and ALBtelecom registered one year's losses. The deterioration of hard market financial performance to provide resources to finance new investments in technology.

The need for investment and existence a critical size is closely linked to consumer behavior, because the use of mobile services by Albanians is increasingly oriented towards the internet, in line with global trends.

AKEP statistics show that in the third quarter, internet traffic from mobile networks marked a new record 52 million GB (Giggabyte), increasing 14% compared to the third quarter of last year. This tendency makes the quality of service delivery an increasingly important element among operators. Compared to basic voice call services and written messages, offering quality internet service is more expensive because it requires more frequency and more investments in net infrastructure and technology.

In the near future, Albania will also tender the first frequencies for the development of 5G technology, which is expected to increase the speed of providing internet service by mobile networks. But building these networks will require big investments from mobile operators, taking in frequencies, as well as establishing and developing networks based on new technology.

Among mobile operators, there is concern that subscription of bottom users may not generate needed revenue to make the network 5G economically sustainable. Even some operators think that since a 5G network infrastructure in Albania would have a significant contribution to more effective governance, the state should be willing to contribute money to investment in the necessary infrastructure.

Similar challenges are facing the fixed services market. The number of operators is higher, especially in large urban centres, but the challenge for the market remains to improve technology and transition to optical fiber technology to end users.

On the other hand, the market has great needs to increase the extent and spread of fixed lines in rural and peripheral areas of the country. Comparative statistics show that, however, the rapid increase in recent years, Albania is one of the countries with the lowest penetration of fixed internet lines in relation to the population in Europe.

AKEP estimates that this index at the end of last year reached 19.7% of the population, but however, the total number of internet connections may be somewhat overrated, because especially for smaller operators the figures are based on assessments of AKEP, rather than on regular and verified reports.

More important, the gap between urban and rural areas continues to be very high. The data points to an internet penetration rate through fixed networks in urban areas on average 30% and in rural areas on average 8%. /Monitor. al