3 Apr 2009Romania Broadband Overview

After the state initiated the liberalisation of the telecommunications sector in early 2003 Romania has become one of the most dynamic and competitive telecoms markets in Eastern Europe. The 35 alternative providers of fixed telephone lines controlled a 31.3 per cent market share. The 54 active providers of voice traffic offering calls via direct or indirect access controlled a 34 per cent market share. Of the 4.9 billion voice minutes used, 1.65 billion were used by the customers of alternative providers, a 40 per cent increase on H1 2007.

For the first time in the recent years, the fixed telephony sector witnessed a slight growth in the penetration rate in 2008, reaching 20.5 per cent at the population level and 51.5 per cent, at the household level. The country witnessed both an increase in the number of landlines, which reached 4.41 million at the end of 2008, compared to 4.26 million at the end of 2007, and a higher traffic volume, which reached approximately 4.9 billion minutes, up by 17 per cent from the H1 2007.

Romtelecom is the incumbent and national fixed line operator set up as an independent state-owned telecommunications and postal service provider in 1991. Today the Greek national telecoms company OTE owns 54.01 per cent of Romtelecom which it acquired in two stages. Firstly in 1998 and secondly following the introduction of the new regulatory regime in early 2003. The Romanian state controls the remaining 44.99 per cent. Romtelecom entered the Internet market in 2005, launching two broadband products – ‘ADSL express’ and ‘ClickNet Express’. Today it dominates the DSL market with services offering speeds up to 20 Mbps.

In H1 2008, Romania’s mobile subscriber base grew by 11.2 per cent resulting in almost 2.6 million net additions and making the Romanian mobile market one of the fastest growing in Central and Eastern Europe. At the end of June 2008, there were 26.5 million valid SIM cards on the market, and the penetration rate stood at 123 per cent.

The mobile market in Romania is dominated by Orange Romania and Vodafone Romania. As of June 2008, Vodafone Romania had 9.25 million subscribers, while Orange had almost 10.1 million. Cosmote was the third largest participant of the mobile sector, and at the end of Q308 Cosmote had 5.25 million customers. Finally, Telemobil (trading under the name ZAPP), had a 2.5 per cent market share.

Vodafone and Orange were awarded the country’s first pair of 3G licenses in November 2004. Vodafone launched its 3G service in mid-2005 while Orange switched on its own high speed network early in 2006. In October 2006, Romania Cable Systems (RCS&RDS) and Telemobil won the two remaining 3G licenses auctioned by the Romanian state. The outcome of the auction was a double surprise. Firstly, RCS&RDS is a cable operator without any mobile network operator experience. Secondly, Cosmote Romania, an established mobile operator with a 2G network covering over 97 per cent of Romania's population, was not awarded a license.

RCS&RDS’s 3G service was launched commercially in December 2007, more than a year after the contest. By end of June 2008, RCS&RDS, which markets its services under the ‘DigiMobil’ brand, managed to sign up 1.1 million mobile customers in a rather short period, mostly by luring them with the newly launched 3G services. By the same period, RCS&RDS covered the population of 176 towns and approximately 2,400 km of national roads, whereas Telemobil deployed its network in 19 towns and covered 1,900 km of national roads. The second stage of the network roll out will end on 31 December 2009. By this date, RCS&RDS is committed to covering another 1,400 km of national roads, whereas Telemobil is to cover 43 towns and another 2,000 km of national roads.

To spice up the competition, a new serious player is likely to enter the market. In September 2008, the regulator granted Romtelecom a mobile communications licence in the 410-415/420-425 MHz frequency bands. The licence enables Romtelecom to build and operate a broadband network, as well as to offer broadband services to customers.