AT Kearney: Regulatory developments and consolidation to threaten telecom operators in Romania

The Romanian telecom market, which has been shrinking due to the crisis in the last two years, could face further potential threats due to the relatively underdeveloped regulatory situation in the country, according to a recent report issued by AT Kearney. Moreover, several competitive moves are expected from companies like RCS & RDS and Cosmote and Romtelecom, which could challenge telecom operator Vodafone, according to the report. The main mobile telephony operators in Romania – Vodafone, Orange, Cosmote – may face several possible development in the regulatory field: more fines, which could be politically or opportunistically driven, more pressure due to EU regulations, the launch of a tariff comparison tool for customers – that can come from the regulatory body ANCOM, among others, according to the analysis. The market performance of the leaders – Orange and Vodafone – was impacted by the crisis in the last two years. Orange's revenues went down by 10 percent between 2008 and 2010, while Vodafone's, by 9 percent during the same period. Cosmote managed to increase its revenues by 29 percent during these two years, following the acquisition of Zapp. The overall mobile market in Romania went down by 22 percent between 2008 and 2010, to an estimated EUR 1.7 billion last year. The average monthly revenue per user (ARPU) went down by 17 percent during these two years, to EUR 6.3 last year. Further market consolidation can be expected especially as leaders are loosing momentum on organic growth, according to the report. RCS & RDS could further consolidate on a fragmented cable TV market, while integrating CATV and mobile services for a powerful bundle, according to AT Kearney. "The industry consolidation is getting momentum, with recent moves of Cosmote (acquisition of Telemobil and merger with RomTelecom recently started), consolidation of cable industry (by RDS&RCS and RomTelecom) as well as possible consequences of announced asset optimization between France Telecom and Deutsche Telekom," according to the report. "For operators it is essential to be ready with thoroughly analyzed scenarios (war gaming) to answer possible macro and competitive challenges (e.g. no-frill operating model in case of slow recovery, answers to possible Orange/RT and RCS&RDS moves)," it goes on. Cosmote and Romtelecom, whose merger has officially started, could develop multiplay offers with fixed voice and broadband, mobile and TV, the report goes on. Vodafone may be seriously challenged if others push for consolidation, AT Kearney concludes. editor@romania-insider.com