Friday, March 23, 2007

Tough times at Romtelecom

Source: Broadband TV News, UK

Date: March 23, 2007

Romtelecom's latest results only serve to highlight the increasingly competitive nature of the Romanian electronic communications marketplace.

The telco, which is owned by its Greek counterpart OTE (54.01%) and Romanian Ministry of Communications and Information Technology - MCTI (45.99%), has undoubtedly had its work cut out following full market liberalisation. Today, it finds itself operating in a sector in which several other companies, including Teletrans, also have extensive fibre-optic infrastructure.

The long-established national transmission company Radiocom is in addition a key player, while the cable industry, headed by UPC and RCS/RDS, provides strong competition in the provision of both Internet access and telephony. It was therefore perhaps inevitable that Romtelecom would sooner rather than later start to fight back by adding TV services to its offer. Dolce, now Romania�s fifth DTH platform, was launched at a cost of �15 million late last year and claims to have already secured at least 60,000 subscribers. Offering nine programme packages, with the most comprehensive containing 45 channels and available for �3.90 a month, it is likely to be followed by an IPTV service in the near future.

This, however, will require heavy investment in the telco's infrastructure and OTE has stated its intention of committing in the region of 500 million Euro to that effect. On the other hand, it has recently been reported that several companies, including Telekom Austria and Deutsche Telekom, are interested in buying OTE's stake in Romtelecom.

In its business plan for 2007-9, OTE has forecast that Romtelecom's income will fall by between 1-2% a year, while its operational expenses will increase by between 1.5-2.5%. Although the Greek telco's commitment to the Romanian market is certainly clear its mobile company Cosmote, launched in early 2006 in a sector dominated by Orange and Vodafone, is performing particularly well Romtelecom, whoever it is owned by in the future, is unlikely to find the going easy.

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