Romania Telecommunications Report Q2 2008

"Last year (2007) I saw the most competitive telecoms market in my entire 30-year experience in the communications industry. There was a fierce battle between operators fighting to gain customers at all costs. In fact, UPC has never seen any other competitive telecoms market as the Romanian market is now." This is the view of UPC Romania CEO Richard Anderson.

Romania's telecoms market is truly ultra-competitive, as demonstrated by UPC's recent announcement that it would partner with the country's largest mobile operator Orange in creating a quad-play package of fixed line and wireless telephony services, internet access and TV. It will compete with RCS&RDS and Romtelecom (with Cosmote), both of which already deploy quadruple services. This goes some way to show the competition in Romania's alternative fixed line market, with incumbent Romtelecom being pushed hard by UPC and RCS&RDS.

Romania's mobile market still continues to show impressive growth - during the third quarter of 2007, there were a total of 1.75mn net additions to the country's subscriber base, taking the overall number of wireless users to in excess of 21mn and 100% penetration by the end of September 2007. Consumer demand was largely behind this growth, but so too was continued investment from the two leading national operators, Orange and Vodafone, and intense competition from third-ranked Cosmote and Zapp, recently acquired by Saudi Oger.

BMI forecasts that growth will continue throughout our five-year forecast period, with a total of 26.85mn mobile subscribers by the end of 2012, representing 120% penetration. The introduction of mobile number portability later this year should ensure that competition remains rife with the country's two smaller operators looking to continue stealing market share away from Orange and Vodafone.

We also expect to see a dynamic broadband market in Romania on the back of our estimates of 74% growth in subscriber numbers in 2007. By the end of 2012 BMI forecasts that there should be 5.25mn high-speed internet subscribers in Romania, pushed by the increase in mobile broadband usage, as the numbers of 3G users rise, and WiMAX technologies continue to emerge. The investment in HSDPA networks by all of Romania's leading mobile operators shows that next-generation wireless technologies remain a key strategy for them all. Add to the mix Romtelecom's plan to accelerate the growth in capacity of its DSL network and the expansion plans of the country's leading cable-TV operators, and we get a clear picture of a very competitive and fast-moving telecommunications industry.