Romania Telecom Sector Report - H2, 2013

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Romania Telecom Sector Report - H2, 2013

In H12013, Romania’s telecom sector was characterized by the strong performance of the broadband Internet segment, which continued to outperform the telecom sector average and recorded double-digit year on year increases on most indicators, with mobile broadband posting the most dynamic annual growth. During this period, Orange Romania, Vodafone Romania, and Chinese producer ZTE, among others, announced new investments, and the state announced the sale of its stake in Romtelecom. The firms Cosmote and UPC posting rising revenues.

The number of mobile broadband connections surged by 18.4% year on year in H1, propped by the 25.8% year on year rise of subscriptions. Accordingly, the penetration rate for broadband EDGE, CDMA,EV-DO, 3G, 3G+ and 4G technologies reached 40.7% end-June 2013, from 35.4% at end-June 2012.

Consumer spending on telecom services is expected to start picking up beginning with 2013, with the demand for Internet services projected to grow at more accelerated pace than the market average. Real final demand (private consumption) for telecom services will predictably resume growth in 2013, to reach USD 1.7bn in 2017, from USD 1.5bn (RON 5.3bn) in 2012 and USD 1.6bn in 2013, according to our QuERI-Emerging Markets Direct World Market Reports forecasts.

Key Points:

• Companies discussed in this report include Orange Romania (subsidiary of France Telecom), Vodafone Romania, Romtelecom, Cosmote, UPC, RCS&RDS, and Chinese firm ZTE.

• The Romanian state’s share in Romtelecom may be sold to controlling shareholder, the German group Deutsche Telecom (majority stakeholder in Greece’s OTE), or the firm may list on the stock exchange.

• Romania remains well below the EU average in terms of Internet access level and usage frequency. The level of Internet access in 2013 in Romania was 58% of households, versus EU28 average of 79%, while broadband connection reached 56% versus EU28 average of 76% of households. Furthermore, 42% of the Romanians have never used the Internet, versus 21% EU28 average, leaving substantial room for sectoral expansion.

Table of Contents

1. Market overview
1.1 Telecom revenues flat y/y in 2012, Internet services segment performs above market average
1.2 Mobile telephony traffic maintains y/y positive performance in H1/2013, customer base continues shrinking
1.3 Number of fixed telephony customers inches up 0.4% y/y, voice traffic drops 8.6% y/y in H1/2013
1.4 Mobile broadband penetration rate reaches 40.7% at end-Jun 2013
1.5 Romania remains below EU average in terms of overall Internet access level, usage frequency, despite dynamic growth in recent years
1.6 Cumulated net turnover of cable TV providers reaches EUR 697.7mn in 2012- industry association
1.7 Pay TV segment reports y/y improvement of customer number, penetration rate in H1/2013
1.8 Telecom regulator approves further termination rate cuts
1.9 Communications ministry to launch EUR 83mn tender for telecom network in disadvantaged areas
1.10 Telecom regulator unveils digital switch-over calendar
2. Corporate news
2.1 Orange Romania earmarks EUR 120mn for investments in 2014, plans to launch several new services next year
2.2 Vodafone Romania to invest EUR 55mn in 4G network, chain expansion in 2014-2015
2.3 Vodafone reports lower ARPU, higher customer base in fiscal Q2/2013
2.4 State to sell stake in telecom incumbent Romtelecom, selects sale advisor
2.5 Decline of Romtelecom’s sales revenues narrows in Q3/2013, profitability deteriorates
2.6 Cosmote reports higher y/y service revenues, lower profit in Q3/2013
2.7 Cosmote Romania contracts EUR 225mn loan to finance network development
2.8 UPC reports rising revenues, subscriber base in H1/2013
2.9 RCS&RDS raises EUR 450mn from seven-year bond issue
2.10 Chinese telecom equipment producer ZTE to carry out EUR 100mn investment programme in Romania

Number of pages: 17
Release Date: Tue, 07 Jan 2014