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Romania Telecommunications Report Q4 2011
Business Monitor International, Sep 2011, Pages: 109
Romania Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Romania's telecommunications industry.
BMI’s Q411 update of the Romania Telecommunications Report contains analysis of the market data from the major fixed telephony, broadband and mobile service providers for the period to the end of June 2011. It also contains data released by the regulator as well as updated forecasts for the mobile, fixed telephony and broadband markets sectors through to 2015. The report also contains BMI’s ARPU forecasts for operators and the wider market through to 2015, as well as – for the first time – converged service operator tables for Romtelecom and UPC Romania.
Many of the familiar trends continued to affect the Romanian telecoms market in the first half of 2011. The incumbent Romtelecom continues to report fixed-line losses in Q111, down 3.9% year-on-year (y-oy) as fixed-to-mobile substitution has continued. The incumbent and alternative operators are also under pressure from cable TV operators and VoIP service providers. However, more positively for the sector, we believe that the increasing prevalence of converged services will help to stabilise fixed-line subscriptions as the service is bundled with pay-TV and/or broadband. BMI forecasts the fixed-line market to decline progressively from 2010, falling to 4.027mn lines by 2015.
The Romanian mobile market reported improved performance in Q211 after a net subscriber loss of 1.132mn in Q111 – the largest ever fall in subscriptions. However, improvement was only relative as the market still recorded a net subscriber loss of 405,000. This loss now means the market has recorded five consecutive quarters of subscriber losses since the last additions in Q110, losing a total of 1.756mn subscribers. All operators have recorded subscriber losses as they have continued to discount inactive SIMs, although we believe this process now may be drawing to an end. However, as all operators reported negative growth, we believe the wider macroeconomic conditions continued to have an impact alongside SIM discounting.
BMI had long held the view that operators’ reported results were built on a large number of inactive subscribers, so the process of deactivation helps provide a clearer picture of actual growth prospects as well as yielding ARPU figures that more closely reflect reality. ARPU declines have stabilised, although we believe there may be further losses as the positive impact of subscriber discounting is removed.
Proposed declines in mobile and fixed termination rates, of up to 30%, also are likely to have a negative impact on total revenues for operators. While economic conditions remain uncertain, we believe subscribers will remain reluctant to access premium value-added services. Greater efforts are therefore needed to retain customers and persuade them to consume more data. We now forecast 29.6mn mobile subscribers by 2015. By then, there will be 9.9mn 3G subscribers, accounting for 33.5% of the market.
The fixed-broadband segment has been boosted by continued deployment of xDSL and by cable operators upgrading their networks in 2010, with xDSL subscriptions increasing 13% y-o-y and cable increasing 10% y-o-y. Meanwhile, growth of dedicated mobile broadband subscriptions far surpassed that of fixed subscriptions. The number of mobile broadband subscribers increased to 930,000 at YE10, exhibiting 93.8% y-o-y growth. BMI believes that the number of mobile broadband subscribers may ultimately pass the number of fixed-line subscriptions, although this will not occur for some time. BMI calculates there were 3.93mn broadband subscribers in total at the end of 2010, a penetration rate of 18.3%. Despite registering growth, consolidation in the cable sector is resulting in the loss of some cable broadband subscribers, while IPTV and over-the-top video services are stealing customers away from smaller players. Mobile broadband is now the primary growth engine in the broadband sector, but we believe it may encounter problems with access and bandwidth if infrastructure is not invested in ahead of subscriber growth.
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