Estonia, with a population of 1.3mn and an EU member state since 2004, is considered to be a digital nation. According to the EU's Digital Economy and Society Index (DESI) which monitors member states' digital transformation, the country is ranks 9th of 27 EU Member States in the most recent 2022 edition.
Dubbed the Silicon Valley of the EU, it’s the first country in the world to offer e-residency. The country is a front-runner in some DESI indicators, in particular digitalisation of public services - it allows anyone from anywhere to register a company without being physically present in the country. It also offers e-resident ID cards and Estonians can sign contracts or vote online with their ID cards (almost half of population voted online during the last parliamentary elections in 2019). The country comprises over 2,000 islands and scores above the EU average on all 11 DESI indicators, it ranks 26th on connectivity. The country’s fixed and mobile broadband take-up is high, it’s above the EU average for overall fixed Very High-Capacity Network (VHCN) coverage, but delays in assigning 5G spectrum bands have resulted in it lagging behind in commercial 5G services.
Estonia’s MNOs
There are three MNOs in the country – Elisa Estonia, Telia Estonia and Tele2.
Elisa Estonia which is subsidiary of Finnish Elisa Group has the biggest market share of approximately 42% in terms of subscribers and claims its 5G network to have reached 70% population coverage.
Elisa Estonia’s parent company Elisa Group acquired the Finnish and Estonian units of Santa Monica Networks which provides network integration, design and installation services, as well as IT security and data centre, for an undisclosed amount in 2017. Elisa Estonia now offers IT services to B2B customers such as security and teleworking solutions.
TowerXchange understand Elisa has achieved automation of network tasks with a full automation of its network operations centre (NOC) in Estonia and has around 60 automation use cases in its network operation and optimisation in both countries it operates. It uses a software solution called Elisa SON which it also offers to other MNOs to manage traffic load across their networks without the need for human intervention, with Romanian MNO Digi being one of them.
Telia Estonia, the local subsidiary of Swedish MNO Telia, is second with a 35% market share in terms of subscribers. It also offers fixed internet connection to homes. Telia says it has invested EUR25mn in the development and upgrade of its communications network in the country in the past two years.
Telia Estonia says its fixed broadband network, a mix of fibre and copper andreaches over 550,000 households. It's announced further plans to work on fibre development projects in 2023 in big cities, including the capital.
Swedish-owned Tele2 Estonia is the third MNO and has a 23% market share.
Tele2 provides broadband services over the fibre network of power supplier Elektrilevi. Tele2 gained a licence to offer fixed line telephony services in November 2000, but it chose to focus on its mobile network and to offer services via wholesale agreements rather than building its own infrastructure.
In May 2023, it announced it has opened its first millimetre wave (mmWave) 5G base station operating in the 26GHz band which is situated just outside of the capital of Tallinn. Although there are no phones or routers on sale in Estonia at present that support the use of these frequencies, the operator says they’re strategically important and Tele2 is currently using them in the development of its 5G network.
TowerXchange understands there is network sharing in place between the MNOs but has not received confirmation on its scope.
The state of 5G
All three 5G spectrum pioneer bands have been assigned with the most recent one being in the 26GHz band in May 2023. The country’s Consumer Protection and Technical Regulatory Authority (TTJA) has announced all three MNOs have taken part with Elisa paying EUR1.626 million for two licences while Telia bid EUR1.602 million and Tele2 offered EUR1.600 million.
The 3.5GHz concessions were auctioned in mid-2022 with the three MNOs getting licenses and 700MHz licences were also awarded to the three MNOs in November.
All country’s MNOs have said they will continue with expansion of their 5G infrastructure.
Lithuanian Telecommunications and media company Bite Group which has presence in Estonia through its provision of TV services, has said it will enter the telecoms market in the country offering consumers fixed, mobile internet if they win the local 5G spectrum auction in the 3.5GHz band. It has also said it will consider investing in the country’s broadband telecommunications companies through acquisitions. Bite submitted an application to take part in one of the 3.5 GHz tenders in mid-2022 but did not submit a bid. Bite is majority owned by US private equity firm Providence Equity Partners LLC.
As a result of the war in Ukraine, Estonia's and the other two Baltic country regulators have increased cooperation among themselves in the field of communications, particularly spectrum management. Estonia and Latvia have signed a coordination agreement for the 5G pioneer band 3.6 GHz. The agreement allows each country to provide stronger coverage to consumers at border areas without interfering with the communication of the neighbouring country.
What does the future hold?
Under the country’s Digital Strategy for 2030, Estonia will focus on cybersecurity and will continue to invest in new digital public services. The government plans to roll out an interoperable network of AI applications which enable citizens to use virtual assistants through voice-based interaction. Users will be able to carry out tasks such as filing a consumer complaint, applying for permits, renewing their identification cards, reporting a car accident and borrowing books, all via virtual assistant. EUR10.48mn in funding will be provided.
Estonia has developed a nationwide 3D digital twin, a project largely financed through EU regional funds, which is used by all cities and communities, including in rural areas. The use cases are currently focused on planning, designing and constructing buildings, but more real-time applications like energy performance monitoring are planned.
The country has also signed an agreement with its Finnish neighbour on cross-border collaboration. The first stage of it is focused on advancing digital transformation within logistics to enable efficiencies in cross-border transport and trade. Both countries will establish a capital funding plan with Finland contributing 60% and Estonia 40%. Estonia and Finland already cooperate on the electronic exchange of population data (EEPD) which is used to update data for individuals moving between the two countries. The commercial registers of each country began exchanging data on a cross-border basis in 2020.
Equipment vendor Ericsson has recently announced it will build a next-generation smart manufacturing and technology hub in Europe just outside the country's capital. The 50,000-square meter hub is expected to be operational in early 2026. The new facility will be a greenfield investment valued at EUR155mn and will consolidate all of Ericsson's operations in Estonia into a single facility. Fredrik Jejdling, Executive Vice President and Head of Networks, Ericsson has said that the hub will be fully powered by renewable electricity and will aim to attract local and European talent.
FTTH coverage in the country is expanding. Elektrilevi has said says it plans to reach 200,000 homes and businesses with its fibre infrastructure by end-2024. It is expecting other operators to sign up to use its networks on a wholesale basis in addition to Tele2.
A growing trend related to reaching certain ESG goals among Estonian telecoms providers is the use of renewable energy. Elisa and Telia have started a long-term partnership with local renewable energy solutions developer, Sunly City to install solar panels next to their towers to increase green energy consumption. TowerXchange understands solar panels in the country will be increasing in number with Elisa announcing it will initially build solar panelss next to 10 of its towers with plans to extend these to most of its towers in Estonia which total approximately 900.
Telia Estonia has said it will install solar panels to 100 of its towers. TowerXchange estimates the total tower count in the country to be around 2,500.
The tower landscape
There are no towercos in the country. Telia Estonia’s parent company has carved their tower assets in Sweden, Finland and Norway into separate towerco units. They include only the directly owned shareable towers, with single tenanted rooftop sites and stakes in joint ventures remaining outside of the towerco perimeter. Telia's towercos in the Nordics are 49%-owned by infrastructure investor Brookfield and Swedish pension fund Alecta. To date, the company has not announced plans for their Baltic towers.
Tele2 is one of the few European MNOs yet to announce a strategy for their tower portfolio, although had previously stated that “there is an opportunity to do more in terms of sharing and separating out some of our infrastructure assets”. The company has experience in joint ventures, having formed two in Sweden - SUNAB (with Telia, covering 3G which is in the process of being wound down) and Net4Mobility (with Telenor – whose remit has just been extended to include 5G as well as 2G and 4G). The company also attempted to form joint ventures with Bite in Latvia and Lithuania but the JVs were wound down following local opposition.
Elisa proactively markets its tower portfolio to other MNOs and IoT players.
Despite global trends and monetisation opportunities that passive infrastructure spin-off presents, the parent companies of all three Estonian MNOs have not announced any carve out plans for their assets in the country. TowerXchange will continue to follow the developments in the market and look for signals if this is going to change.
