Double-Digit Growth for Romania's Telecoms Market
According to PMR analysts in 2007 the telecoms market in Romania again recorded a double-digit growth rate, driven by the rising revenues of mobile operators and ISPs. Even though the increasing competition and erosion of prices of services flatten the growth curve, in the years to come Romania's telecoms sector will continue as one of the most rapidly developing in Europe.
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Value and Growth Rate of the Market
Internet Subscriber Numbers
According to the report, in 2007 the telecommunications market in Romania went up by 14% to RON 14bn in comparison with 2006. This was the lowest rate of increase recorded since 2000. The falling growth rate is an effect of steadily decreasing prices of telecommunications services, which drive down the pace of growth of revenues of telecommunications operators. On the other hand, Romania is still one of the fastest developing ICT markets in Europe (to compare, the Polish market increased by some 2% in the same period). Moreover, even though the competition will intensify and the prices will be on the wane, in 2008 the Romanian telecoms market is expected to continue to develop at a double-digit rate, though the growth dynamics will drop by about 3 p.p. to 10.6%.
In 2007 the most rapidly growing segment was DLISP (data transmission, line rental, internet access), which expanded by approx. 23% and was worth RON 1.53bn. Thus, the share of the DLISP segment in the entire telecommunication services market in Romania rised by only 1 p.p. to 11%. The main reason for such a small increase was the continued very good performance of mobile telephony - in 2007 mobile operators accounted for 67% of the market's value (2006: 64%).
Growing user numbers remained the key factor determining the growth of the market's value. ANRCTI, Romania's regulator for the telecommunications industry, reports that between 2005 and 2007 the number of active SIM cards increased almost twofold. At the end of 2007, the penetration of the mobile market in Romania reached 106%. However, this figure does not automatically translate into the actual number of users. Instead, it shows that many of the existing mobile telephone owners have more than one SIM card - in 2007 the average number of SIM cards per user was 1.4.
Favourable macroeconomic situation, higher disposable incomes and falling prices of telecommunication services made the number of internet users increase rapidly between 2003 and 2007. Based on data provided by the operators and official statistics published by the regulator we estimate that every year the number of internet users went up by almost 90%, to reach 5.8m in 2007. These figures must be adjusted, though, by the data for users who connect with the internet via their mobile phones. Very frequently, they do it only occasionally - to download a logo or ringtone. Thus, the official base of customers using their mobiles to connect with the internet comprises persons who can have or declare having such access, rather than actual subscribers paying fixed monthly charge. The number of internet users net of such persons may be estimated at some 3.6m in 2007.
The main players on the Romanian telecoms market in 2007 were Romtelecom, the largest fixed-line operator, and RCS & RDS and UPC Romania, the leading CTV operators. Mobile operators (particularly Orange and Vodafone) also have fairly strong positions. Still, a significant share in the market is held by small local providers.
From 2000 to 2006, the number of internet service providers in Romania rose almost 30-fold, driven primarily by the growing interest in internet access among corporate and individual customers. The sharpest increase in ISP numbers was seen in 2003, when ANRCTI passed regulations whereby alternative operators gained access to Romtelecom network. In 2007 the number of ISPs active on the Romanian market declined slightly due to the consolidation processes.
PMR analysts forecast that the DLISP market in Romania will expand by about 20% (in value terms) in 2008. The two-digit growth rate may continue well into 2012, powered by the performance of the ISP market, and in particular the broadband internet access, whose popularity will be rising, especially among individual users. The market will grow also on the back of new access technologies (such as WiMAX) and bundled services. There is every sign that over the next five years the number of broadband users in Romania will almost double.
Posted to the site on 18th August 2008
