Who are the contenders?
Cosmote Romania is a GSM 1800 mobile operator, commercially launched in 2001 and which failed to attract an important market share. After more than two years of hesitation in making a decision, CosmoRom was taken-over in mid 2005 by Greece's Cosmote and commercially re-launched on December 6 last year under the new brand name Cosmote Romania, being 70% owned by Cosmote of Greece and 30% by RomTelecom.
During the first quarter after re-launch, Cosmote Romania attracted 226,587 net new users to a total of 275,521, or 2% market share of a SIM market of about 14.1 million. This could have been the result of a "revolutionary" offer: 2,000 minutes per month of calls in the Cosmote network for USD3.87 (euro 3).
Telemobil already operates a CDMA 2000 1X and CDMA 2000 1X EV-DO network in the 450MHz band, offering mobile voice and Internet (up to 1.5 Mb/s using EV-DO technology) services, ie, Zapp Mobile. Zapp services were launched on December 7, 2001, while today they have about 0.4 million users in a 14.1 million market, or 3% market share.
RCS&RDS operates cable TV networks (optical cable - about 4,000 km - and coaxial cable) in about 100 Romanian cities, providing cable TV services, Internet and telephony services to about 0.9 million clients. Being present in Romania, Slovakia and Hungary, RCS&RDS is one of the most important cable TV operators in Central Europe. In late May 2006 RCS&RDS had over 1.5 million aggregated users in Romania, Hungary and Slovakia, that is to say, 900,000 CATV subscribers, 450,000 telephony users (RDS.Tel), 300,000 Internet users (RDS.Link), and 250,000 DigiTV users.
The company estimates that is has a 25% market share in Romanian cable TV, 20% in the Internet access market and 10% in fixed telephony. In addition, RCS&RDS has an 80% market share in digital TV via the satellite market where it competes with three operators. Last year, shareholders merged RCS (cable TV) and RDS (Internet, data transmission, etc) into one company RCS&RDS, paving the way for a sale. There were rumours of Deutsche Telekom's interest in acquiring RCS&RDS, but no deal was concluded because the price asked by shareholders was too high, at US$1 billion.
To comply with the 3G competition requirements, the company's shareholders agreed to increase the company's share capital to approximately USD$15.5 million. In addition, RCS&RDS started discussions with ING for a US$200 million loan.
RCS&RDS is for sale
A 3G licence within a company's business portfolio can make that company more attractive for a potential buyer, as well as being a very powerful competitor if it can rapidly roll-out its 3G network.
Combridge, the local branch of Magyar Telekom, is another contender in the Romanian 3G contest. Deutsche Telekom, in turn the main shareholder in Magyar Telekom, repeatedly declared last year its interest in the Romanian market, while early this year Combridge launched EUfonika, a fixed telephony (long-distance) service. A 3G licence could be a chance for Deutsche Telekom to gain a sound footprint in Romanian market.
The surprise is coming from Radiocomunicatii (Radiocom), the main provider of radio-communications services and distributor for Romania's national radio and TV channels and fixed telephony, as well as intercontinental transmissions via the Cheia earth station. Among others, Radiocom operates:
- a 2,500 km SDH radio-relays network;
- a 2,900 km national broadband ATM network based on an PMP licence in 3.5 GHz and 26GHz bands;
- a 4,600 km national ATM/MPLS backbone using SDH and PDH radio-relay networks;
- a satellite communications centre, Cheia; and
- an IP telephony network.
Outlook and implications
According to the 2005 Guide to Romanian Telecommunications (www.inatelecom.org/2005Guidetoromaniantelecommunications/tabid/442/Default.aspx) Romania's mobile telephony turnover could grow 60% to US$3.6 billion in 2009 over 2005, Romania being one of the few countries in Europe still having organic growth potential. A 3G licence could be Cosmote's and Telemobil's chance to stay in business, because without a 3G licence it is difficult to think about their long-term future.
Having a 3G licence, Cosmote Romania will with a high degree of probability use the European technology of UMTS (W-CDMA), while Telemobil could continue using CDMA technology, primarily because of the existing CDMA network and necessary investments. And yet, according to the 2005 Guide to Romanian Telecommunications there is a risk - that of remaining a niche player just as long as CDMA is an "island" in Europe. Switching to the European technology that is UMTS could be a prerequisite for business revival, but it needs a new business model and money, much more money...
Vodafone Romania, Orange Romania and Cosmote Romania already operate networks under 2G licences, so for a new entrant (Telemobil, which operates a CDMA network, Radiocom, Combridge, RCS&RDS, etc) to win a 3G licence in Romania also requires a 2G licence to be in place to minimise costs and produce fair competition.
Next up is September 4, by when all suitors have to submit their offers, while in mid October IGCTI could announce the winners of those last two Romanian 3G licences.