2009 Romania - Telecoms, Mobile, Broadband and Forecasts

One of the European Union’s newest members, Romania underwent a period of extensive reform leading up to EU ascension that coincided with a real GDP annual growth rate averaging 5.8% from 2000 to 2008. Much of this growth was due to foreign direct investment, capital inflows and loose fiscal policies.

Like many of its neighbours, Romania has been impacted by the recent global financial turmoil through declining demand for its exports, a slowdown of credit activity, and lower foreign direct investment inflows, with Romania expected to record an 8.0% contraction in real GDP for 2009 followed by 0.5% growth in 2010 according to EU estimates. During the midst of the crisis a financial support package of €19.9 billion was arranged in May 2009 to support Romania’s 2009/10 financing gap, of which €12.9 billion over 24 months was provided by the International Monetary Fund. In return, Romania is required to meet a number of obligations which include reducing its fiscal deficit to under 3% by 2011.

Like much of the economy Romania’s telecoms market underwent reform to align telecommunications policy with that of the EU. Competition has been introduced but incumbent operator RomTelecom retains a major share of the overall telecoms market. Ongoing action by an active regulator has improved market conditions slightly, particularly in the network access sector, although more stringent measures are required to ensure fair competition, expected to materialise as the regulator expects to complete market competitiveness analysis in 2010 and 2011.

Internet services are widely available in Romania with healthy infrastructure based competition although competition is more prevalent in cities and urban areas where competing platforms are deployed. Romania’s Internet market is undergoing a transformation as broadband services increase in popularity due to falling broadband access prices and now represent the majority of Internet connections, with future Internet connection growth in 2010 and beyond exclusively due to broadband. Internet services are available from a number of ISPs, some of which are expanding service offerings to include VoIP and broadband TV (IPTV) in an attempt to differentiate offerings.

A healthy digital TV market is evident with competing digital TV offerings from a number of cable TV and satellite pay TV platforms. A strategic plan for the transition to Digital Terrestrial TV was published by the Ministry of Communications and was approved in October 2009, with analogue switchoff expected by 2012.

Romania possesses a well developed mobile market with mobile ownership levels in excess of 100% although such penetration levels indicate multiple SIM card ownership. Romania’s mobile market is served by five mobile network operators although the merger between two operators will reduce this number to four. The launch of 3G/HSDPA networks has opened up a new revenue growth opportunity in 2010 centred on mobile broadband, with all operators offering competitive offerings with generous data allowances.

Key highlights:

·         Healthy platform based broadband competition is evident, with access available via cable, ADSL, FTTx, LAN and wireless. ADSL accounts for a quarter of connections, with micro LAN based ISPs representing the majority of broadband subscriptions. Competition within the ADSL market should improve as the regulator completes market analyses in 2010 and 2011 and implements measures to improve wholesale market conditions.

·         An emerging Internet society is evident, encompassing public administration and health. Uptake of e-government services by businesses in particular is evident, with up to 40% of businesses using e-government services to obtain information, forms and return forms.

·         Digital TV is widely available via cable, satellite, IPTV and DTTV. The cable TV market is dominated by two large players. Both offer broadband and voice telephony in addition to CATV while the largest operator has also launched 3G mobile services. Five satellite TV platforms are in operation, with consolidation expected given the level of existing digital TV market competition.

·         Romania’s established mobile network operators have launched 3G/HSDPA services, with growth in 2010 focused on promoting 3G take up and mobile broadband services. The future growth path of mobile broadband take up is expected to emulate that of the mobile voice market over the coming years due to the decreasing cost of access and capable handsets and increasing end user awareness and ease of use.

Romania – key telecom parameters – 2008; 2010

(Source: BuddeComm based on industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.