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Romania "fourth CEE telecom player by year end" - Pyramid

Through the widespread selling of bundling services, the Romanian telecoms market is set to become the fourth largest player in the CEE market. Pyramid Research make this assertion in their new report Communications Markets in Romania, which also looks five years into the future.  

By year-end 2009, Romania is expected to become the fourth-largest CEE telecom market revenue-wise, after Russia, Poland, and the Czech Republic. What is more, total telecom revenue is projected to grow to US$7.6 billion by 2014 at a CAGR of 4.27%, above the average result for the CEE region, notes Sylwia Boguszewska, Analyst at Pyramid Research and co-author of Communications Markets in Romania.

Broadband and pay-TV will become the major sources of growth in the Romanian telecom market during the next five years, while bundling remains key for success as competition intensifies, the  report forecasts.

Communications Markets in Romania offers a profile of the converged telecoms, media, and technology sectors in Romania based on exclusive market and economic data. The 30-page report provides detailed competitive analysis of both the fixed and mobile sectors, tracks the market shares of technologies and services, and monitors the introduction and spread of new technologies such as WiMax, IPTV, and VoIP. 

"Due to a strong uptake of fixed and mobile broadband, the mobile data market is forecast to be worth more than US$0.8 billion in 2014 - an almost 80% increase in value from 2009," says Sylwia Boguszewska. "Fixed broadband will continue to grow, boosted by growth in DSL and cable, at a CAGR of 4.1%, while mobile broadband will grow at a CAGR of 21.7% in the same period...  "IPTV is the fastest-growing segment of the pay-TV market; its market share will almost triple in the 2008 to 2014 period - increasing from 1.0% in 2008 to 3.5% in 2014."

Most players have launched triple-play packages combining telephone, Internet, and TV services, while bundles incorporating fixed and mobile broadband are also becoming a standard. "Although Pyramid expects that triple play's share will decline to 66% in 2014 as households affected by the economic decline go for lower-priced bundles, bundling remains key for success...Affordable, budget bundles are likely to attract customers hit by the economic crisis; at the same time, high speeds and rich content remain important as competition intensifies.

Another prediction in the report is that mobile operators Orange and Vodafone are expected to enter the multiplay market following the anticipated LLU price drop by Romtelecom, and their entry will make fixed-mobile bundles standard and increase competition.

Developing Telecoms’ correspondent Dr. Nicolae Oaca in Romania comments:

On July 1st 2009, Ziarul Financiar published the main findings of a report on Romania by Pyramid Research. The main focus of the report is the mobile industry’s 2009 forecast, with Pyramid analyst Bakhyt Weeks predicting that mobile communications services will grow from €2.8bn to €2.9bn.

However, there are several factors that make this prognosis appear optimistic:

  • The global economic downturn could decrease Romania’s GDP by anything from 4% to 9% in 2009, making a 3.6% increase in mobile revenues seem increasingly unlikely. While Romania’s telecoms sector has experienced growth during periods of decreased GDP, this is unlikely to occur during a global economic crisis.
  • The market is approaching saturation: the number of SIMs sold is stagnating, if not decreasing, and this leads to falling revenues. In Q1 2009, the top two mobile service providers – which, together, account for roughly 85% of total revenues – saw a drop in revenue of around 14%. While the third largest provider did witness an increase, its comparatively small size renders this fairly insignificant.
  • The market is tightly regulated, with the European Commission monitoring the mobile industry in order to put limits on costs. On July 1st 2009, roaming tariffs were again decreased by order of the EC, while service providers are under pressure to remove mobile termination rates (MTRs), which are seen as unnecessary added costs.
While mobile internet is experiencing growth, it does not represent a significant percentage of total revenues.

* Communications Markets in Romania is part of Pyramid Research's Central and Eastern Europe Country Intelligence Report Series. It is priced at US$990 and can be purchased online at www.pyr.com

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