Romania Telecom Sector Report - H2, 2014

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Romania Telecom Sector Report - H2, 2014

This report covers the market developments in H1/2014 and the data available as of December 2014.

The statistical indicators on the Romanian telecom sector’s performance in H1/2014 show that the market remains dynamic and that despite deterrents such as MTR cuts and tight price competition, which continued denting into the players’ revenues, there is still enough room for growth, particularly on the internet segment.

Mobile telephony continued to record increase of traffic this year, while the customer base shrank, though the decrease slowed down. The rise of traffic however fails to reflect in higher revenues of mobile operators on the segment, as prices are affected by tight competition. According to the latest statistical data (released by the telecom regulator in December 2014), mobile telephony service revenues dropped by 6.2% y/y in 2013, thus driving downwards the full-year performance of the entire telecom market.

On the upside, the internet service revenues surged by 16.9% y/y in 2013, propped by the cheering 32% y/y hike of the mobile segment, and prospects for the future are optimistic. In H1/2014, fixed and mobile broadband internet connections maintained y/y increase, with the mobile segment recording the most accelerated pace- up by 28.7% y/y over the period.

Bundled services also kept dynamic y/y performance in H1/2014, with the number of users more than double compared to end-December 2011, reflecting the customer’s preference towards several telecom services purchased together, at a more convenient price.

Key points:
• Mobile telephony traffic maintains y/y positive performance in H1/2014, number of active users continues shrinking
• Mobile broadband connections surge 28.7% y/y in H1/2014
• Pay TV segment reports y/y improvement of customer number, penetration rate in H1/2014
• Retail sales of telecom equipment record dynamic increase in Jan-Sep 2014, propped by higher smartphone sales
• Telekom targets to become Romania’s largest integrated operator in 2015
• RCS&RDS to acquire all CME’s radio licences in Romania
• Two international IT groups to start operations in Romania, employing 4,500 in total


Table of Contents

Contents
Executive summary 4
Market overview 5
Mobile telephony traffic maintains y/y positive performance in H1/2014, number of active users continues shrinking 5
Number of fixed telephony customers, voice traffic down y/y in H1/2014 6
Fixed-line broadband connections rise 5.4% to 3.9mn as of end-Jun 2014 7
Mobile broadband connections surge 28.7% y/y in H1/2014 7
Pay TV segment reports y/y improvement of customer number, penetration rate in H1/2014 8
Bundled services continue growing at dynamic pace 9
Retail sales of telecom equipment record dynamic increase in Jan-Sep 2014, propped by higher smartphone sales- study 9
Telecom revenues decline y/y in 2013, driven downwards by mobile, fixed telephony 9
Telecom authority launches tender for DTT multiplexes 12
Romania mulls launching own telecommunications satellite 12
Corporate news 12
Revenues, subscriber base of Orange Romania up y/y in Q3/2014 13
Vodafone Romania’s customers base shrinks, ARPU rises in quarter ending Sep 2014 13
Vodafone Romania to focus on internet, business customers in 2015 14
Telekom Romania’s sales revenues down y/y in Q3/2014, driven by mobile telecom arm 14
Telekom targets to become Romania’s largest integrated operator in 2015 15
UPC reports higher broadband, telephony customer base in Q3/2014 15
RCS&RDS to acquire all CME’s radio licences in Romania 16
RCS&RDS to invest in own store network 16
RCS&RDS shareholder asks €60mn for 3.6% stake 16
Telecom daPhone Romania closes operations-report 17
Belgium's bpost expected to submit bid for Posta Romana in March-April 2015, in company’s on-going privatisation process 17
Two international IT groups to start operations in Romania, employing 4,500 in total 17

Table 1 Mobile telephony selective indicators in 2011-2014 (eop, half-year, y/y) 5
Table 2 Fixed telephony: Number of lines and penetration degree in 2011-2014 (eop) 6
Table 3 Internet: Fixed broadband connections by support type in 2012-2014 (mn) 7
Table 4 Internet: Number of fixed broadband Internet connections and penetration rate in 2011-2014 7
Table 5 Pay TV: Selective indicators in 2011-2014 (eop, half-year) 8
Table 6 Bundled services- Selective indicators in 2011-2014 (eop) 9
Table 7 Telecommunications equipment sales in 2013-2014 (€mn) 9
Table 8 Telecom market revenues in 2011 - 2013 (RON mn) 10
Table 9 Vodafone Romania- Selective data on customer base in 2011/2012-2014/2015 fiscal years 14
Table 10 UPC Romania - Number of customers in 2012-2014 (eop) 16

Figure 1 Mobile telephony: Number of users and penetration degree in 2011-2014 (eop) 5
Figure 2 Mobile telephony voice traffic (excluding roaming) in 2011-2014 (bn minutes) 6
Figure 3 Fixed and mobile telephony penetration degree in 2011-2014 (eop, half-year) 6
Figure 4 Internet: Mobile broadband connections penetration rate in 2012-2014 8
Figure 5 Structure of telecom market revenues by segment in 2012-2013 (% of total) 11
Figure 6 Telecom service revenues in 2008-2013 (RON mn, € mn) 11
Figure 7 Telecom market selected indicators in 2010-2017f ($ bn, annual) 11
Figure 8 Real market demand (apparent consumption) for internet services in 2003-2017f (mn 1995 $, annual) 12
Figure 9 Orange Romania- Overall ARPU in 2008-2014 (€, annual rolling) 13
Figure 10 Orange Romania- Number of customers in 2008-2014 (mn, eop) 13
Figure 11 Vodafone Romania- ARPU in 2011/2012-2014/2015 fiscal years (€) 14
Figure 12 Telekom Romania- Selective financials in 2013-2014 (quarterly, € mn) 15
Figure 13 Telekom Mobile Romania- Selective financials in 2013-2014 (quarterly, € mn) 15

Number of pages: 17
Release Date: Tue, 06 Jan 2015