BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications Sector of Romania

Accounting for about half of the country's telecoms revenues, Romania's telecoms market increased in terms of value by nearly 30% in 2006 to about EUR4bn, according to BMI estimates. Helping this growth is the rise of the alternative operator in Romania with companies such as UPC and RCS&RDS putting an increase amount of pressure on incumbent operator Romtelecom. This they are doing by offering multiple services and in the case of RCS&RDS, the provider is looking to supply quadruple-play services with the introduction of its 3G services.

Having won a 3G licence towards the end of 2006, RCS&RDS plans to fund its commercial 3G launch by listing on the London Stock Exchange. It hopes to raise as much as US$500mn, which would give the company a total market value of US$3.5bn. This is a defining moment for the operator as it prepares to add to its existing cable TV, fixed-line telephony and high-speed internet business with a new mobile unit, which will be in direct competition with market leaders Orange and Vodafone as well as alternative CDMA operator Telemobil. The operator currently controls about two-thirds of Romania's growing cable broadband market, which currently comprises about 30% of the entire broadband market in Romania.

With Romania's fixed-line market suddenly offering potential for growth, especially in terms of highspeed internet and cable-TV, it is interesting to note that Middle East telecoms holding company Oger Telecom and its subsidiary Turk Telekom are rumoured to be interested in investing in Romanian and Slovenian fixed-line telephony markets. Whereas in Slovenia this is likely to be via the acquisition of a stake in Telekom Slovenije, in Romania it is just as likely that it will be via one of the country's alternative operators, showing the recent growth in market competition.

Romania's mobile market remains in good health with BMI expecting another year of growth – probably by about 30% in terms of subscriber numbers. Orange is the market leader with an approximate 44% market share, just ahead of Vodafone on 42%. Both operators have seen their market shares decline in recent quarters, but OTE-unit Cosmote now controls just over 11% of the market, a great effort considering its market share was just 0.4% at the end of 2005. Orange and Vodafone are investing heavily in the 3G market, with both operators now able to offer HSDPA services across about 30 cities in Romania. Orange had about 480,000 3G subscribers at the end of June 2007, which represents an approximate 340% y-o-y increase. Although not giving subscriber figures, Vodafone is fighting back, which we can see from its ARPU performance, which has risen to US$15.7, up by 12% in a single quarter. With over 40% of Romania's broadband users doing so via mobile technologies, BMI expects that 3G mobile telephony services will continue to grow in popularity and that by the end of our forecast period in 2011 there should be 4mn 3G users, which should account for about 15% of all mobile subscribers in Romania at the time.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-Line

Table: Romanian Telecoms Sector Fixed-line Historical Data & Forecasts

Internet

Table: Romanian Telecoms Sector Internet Historical Data & Forecasts

Mobile

Table: Romanian Telecoms Sector Mobile Historical Data & Forecasts

Chapter 3 - Macroeconomic Forecast Scenario

Growth To Exceed 6% This Year

Risks To Outlook

TABLE: GDP Output & Population

Chapter 4 - Country Snapshot: Romania Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 - Business Environment

Eastern European Markets

Romania

Table: Romania Telecoms Industry SWOT

Chapter 6 - Competitive Landscape

Market Structure

Table: Key Players: Romanian Telecoms Markets

Table: Selected Operators Financial Indicators

Fixed-Line Overview

Table: Regional Fixed-Line Penetration Overview

Internet Overview

Table: Regional Internet Penetration Overview

Mobile Overview

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-Line

Internet

Mobile

Table – Romanian Mobile Market Q306

Table: Romania Mobile Market, Net Additions, Q306

Industry Developments

Chapter 7 - Company Profiles

Regional Case Study: Alcatel

Table: Alcatel Recent European Contract Wins

Selected Profiles – Operators

RomTelecom

Cosmote Romania

Vodafone Romania

Orange Romania

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.