Telecommunications Sector Romania

Transcription

Telecommunications
Sector
Romania
May 2015
Produced by:
Any redistribution of this information is strictly prohibited.
Copyright © 2015 EMIS, all rights reserved.
-1-
Table of Contents
I.
1.
2.
3.
4.
5.
6.
7.
Sector Overview
Sector Highlights
Key Sector Data
Economic Importance
Telecom revenues – forecasts
Regulatory framework
National strategy on 2020 digital agenda
Digital Agenda for Romania 2014-2020
II.
1.
2.
3.
Fixed Telephony
Segment Highlights
Key Segment Data
Market Shares
5. Market Shares
6. Operator Switching
IV. Internet Services
1. Segment Highlights
2. Key Segment Data
3. Internet access providers
4. Mobile connections
5. Fixed connections
6. Internet Speed
7. Recent Developments
V. Television
1. Key Segment Data
2. TV Services Providers
3. Advertising Market
4. Recent Developments
III. Mobile Telephony
1. Segment Highlights
2. Key Segment Data
3. Traffic volume on mobile networks
4. Market concentration
-2-
Table of Contents
VI. Telecom Sector Headlines
VII. Main Players
1. Top M&A Deals
2. M&A Activity, 2013-2014
3. Telekom Romania
4. Telekom Romania Communications
5. Telekom Romania Mobile Communications
6. Orange Romania
7. Vodafone Romania
8. RCS&RDS
9. UPC Romania
-3-
I. Sector Overview
-4-
Sector Highlights
Revenues
Total revenues from the provision of electronic communications networks and services in Romania decreased in 2013 by 1.5%
to RON 14.4bn, according to market watchdog ANCOM. In 2014, the figure is expected to have decreased again due to lower
revenues of telecom operators, influenced by mobile termination rate (MTR) cuts and additional taxation introduced by the
government.
Market
consolidation
The market is expected to continue to consolidate, with companies providing an increasing number of integrated services,
including data, broadband, internet, television and video services. Competition is increasing in all segments and operators are
exploring the need for new services in their battle for clients. For example, internet, TV and telecoms leader RCS&RDS has
announced plans to expand into the energy market and become a power supplier.
Market segments
Fixed line telephony services declined by 2% in terms of subscribers in 2014, with revenues also expected to follow the same
trend, as users switch to mobile telephony and continue to buy smartphones. Mobile telephony services registered a stagnation
in terms of clients, while revenues have been affected by MTR cuts. Growth was recorded by internet access services and pay
TV, due to improvements in coverage and infrastructure development.
Digital Agenda
for Europe
Romania continued to make progress towards the achievement of the Digital Agenda for Europe (DAE) objectives in
2012/2013, a European Commission (EC) report published in July 2014 shows. The number of fixed broadband lines reached
over 3.79mn in January 2014, representing the 9th highest number of lines among European Union (EU) countries. Fast
broadband (at least 30Mbps) penetration reached 10.5%, which is well above the EU average of 6.3%. Ultrafast broadband (at
least 100Mbps) penetration reached 4.6%, also above the EU average of 1.6%.
-5-
Key Sector Data
No of telecom services users (mn)
23.4
4.04
22.9
22.8
3.3
4.2
5.7
4.01
2011
7.1
3.5
9.6
6.0
4.04
3.8
2012
Subscribers to fixed telephony services
Mobile broadband connections
22.9
12.0
6.5
4.0
3.96
2013
Active users of mobile telephony services
Subscribers to television services
6.9
2014
Fixed broadband connections
Revenues from the provision of electronic communications networks and services, by segment (RON mn)
7,644
2,187
7,428
1,857
448
1,536
2,007
2,216
470
2011
Fixed telephony services
6,948
2012
Mobile telephony services
Internet access services
Source: National Authority for Management and Regulation in Communications (ANCOM)
1,584
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1,907
2,592
446
1,610
2013
Data tranmission services
Audiovisual media programme services
Economic Importance
Economic importance
2010
2011
2012
2013
2014
IT&C revenues, EUR bn
3.61*
3.44
3.28
3.26
n/a
IT&C % of GDP
3.4%
3.2%
4.5%
5.4%
5.9%
124
131
134
144
150
GDP growth, %
-1.3%
1.1%
0.6%
3.4%
2.8%
CPI, %
6.1%
5.8%
3.3%
4.0%
1.1%
Net FDI, % of GDP
1.8%
1.3%
1.9%
1.9%
1.6%
Unemployment rate (ILO), %
7.3%
7.4%
7.0%
7.3%
6.8%
Budget Deficit ESA 95, % of GDP
6.8%
5.5%
3.0%
2.3%
1.9%
Net FDI, EUR bn
2.26
1.70
2.49
2.71
2.43
GDP, EUR bn
Comments
Romania's GDP increased by a real 2.8% in 2014, supported by good performances in the industrial sector, which grew by 3.6%, and the information and
communication sector, which continued to outperform other sectors in terms of growth and rose by 8.2%.
At the same time, the direct and indirect impact on the economy of the Strategy for Digital Agenda for Romania may be translated into GDP growth of 13%,
an increase the number of jobs by 11% and a reduction of administration costs by 12% over the years 2014-2020.
The EC expects GDP growth of 2.8% for 2015 and 3.3% for 2016, mainly driven by private consumption, investment and a benign external environment.
The Romanian government targets 3.3% economic growth in 2015.
Source: National Statistics Institute, Ministry of Finance, National Bank of Romania, ANCOM , *EC
-7-
Telecom Revenues - Forecasts
2010
2011
Fixed telecom revenue, USD mn
2013
2014
2015
Mobile telecom revenue, USD mn
194
0.3%
2016
2017
1,942
0.3%
157
0.3%
235
0.3%
1,893
1,803
1,732
1,736
1,699
398
416
2012
0.3%
288
0.4%
0.3%
530
621
0.4%
348
0.5%
1,491
1,706
2,093
Telecom revenues
2018
Telecom Investments (% of GDP)
Comments
The mobile telephony market is expected to grow in the medium term due to rising smartphone and tablet sales, while fixed line telephony is estimated to
drop as it is replaced by mobile usage. According to estimates by the Economist Intelligence Unit, revenues from fixed telephony will drop from USD 348mn
in 2014 to USD 157mn in 2018, while those from mobile telephony will grow from USD 1.7bn in 2014 to USD 1.9bn in 2018.
A 30% increase in the sale of smartphones is forecast for 2015, up from the 2.5-2.7mn units sold in 2014, according to executives of Samsung Romania.
Source: Economist Intelligence Unit
-8-
Regulatory framework
Lower
termination
rates
Special
industrial
assets
taxation
Under EU telecoms rules, as of April 1, 2014, the maximum termination rates in Romania decreased from 0.67
eurocents/minute to 0.14 eurocents/minute for fixed call termination and from 3.07 eurocents/minute to 0.96 eurocents/minute
for mobile call termination.
The new tariffs have become mandatory for all network providers in Romania which are identified as having significant power
on fixed and mobile call termination markets. According to sector regulator ANCOM, 44 providers of fixed networks and 6
providers of mobile networks fall into this category.
In 2014, Romania introduced a tax on "special industrial assets" levied at a rate of 1.5% of the value of their construction. This
significantly affects telecom operators, due to the networks and other property subject to this tax that they possess. The tax,
which has been highly criticized, could result in the postponement of a portion of the investments planned by operators. In
2014, the companies in the sector paid around EUR 35mn on account of this tax.
Following the strong negative impact on the private sector and on investments, the government decided to cut this tax to 1% as
of 2015. The government also plans to eliminate it altogether in the medium term.
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National strategy on 2020 digital agenda
National strategy
on 2020 digital
agenda
Digital Agenda for
Europe
At the start of April 2015, the Romanian government passed its national strategy on the 2020 digital agenda. A full
implementation of the strategic vision for ICT sector in Romania that will meet the national targets specified in this strategy will
require a total investment of more than EUR 3.9bn.
According to a document prepared by the Ministry of Communications and Information Technology (MCIT), which is
responsible for e-government strategy and policy development at the national level, implementing this strategy over the years
2014-2020 will have a direct and indirect impact on the economy which will translate into 13% additional cumulative GDP
growth, an 11% increase in the number of jobs, and a 12% reduction in administrative costs.
Romania has adapted to its current context the 7 Pillars that form the basis of The Digital Agenda for Europe 2014-2020 and
has defined 4 major Fields of Action to follow in order to drive economic growth and increased competitiveness.
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Digital Agenda for Romania 2014-2020
E-Government
Education,
Health &
Culture
Field of Action 1 refers to e-Government, Interoperability, Cyber Security, Cloud Computing, Open Data, Big Data and
Social Media. Progress in this field will help increase efficiency and reduce public sector costs in Romania by modernising
the administration.
Field of Action 2 refers to the support of ICT in education, health, culture and e-Inclusion and will help ensure that ICT
investments create a positive social impact.
The implementation and correlation of the first two Fields of Action are expected to generate, over the period 2014-2020, an
estimated impact on the Romanian economy of about 5% GDP growth and a 1% rise in the number of jobs.
E-Commerce
Field of Action 3 refers to e-Commerce, Research & Development and Innovation in ICT. This builds on the comparative
advantages of Romania and supports economic growth in the private sector. The implementation of the measures
envisaged in this Field of Action is expected to generate an impact on the Romanian economy of around 3% in GDP and 2%
in terms of jobs in the period 2014-2020.
Digital services
Field of Action 4 targets broadband and digital services infrastructure, aiming to support social inclusion and benefits across
all other Fields of Action.
- 11 -
Digital Agenda for Romania 2014-2020 (cont'd)
Objectives and areas of actions
Objective 2020
EU Targets
RO Targets
Current situation in
Romania
Covered by broadband
100% by 2013
100% by 2020
90.0% (2013)
Covered by broadband above 30 Mbps
100% by 2020
80% by 2020
66.0% (2013)
Subscriptions to fixed broadband above 100 Mbps
50% by 2020
45% by 2020
25.0% (2013)
Population to buy online
50% by 2015
30% by 2020
8.0% (2013)
Population to buy online cross-border
20% by 2015
5% by 2020
1.0% (2013)
SMEs to make online sales
33% by 2015
20% by 2020
7.3% (2014)
Regular internet usage overall
75% by 2015
60% by 2020
48.0% (2014)
Among disadvantaged people
60% by 2015
45% by 2020
24.0% (2012)
Population that has never used the internet
15% by 2015
30% by 2020
39.0% (2014)
Citizens using e-Government
50% by 2015
35% by 2020
5.7% (2014)
Returning completed forms
25% by 2015
20% by 2020
6.6% (2013)
Source: Ministry of Communications and Information Technology
- 12 -
II. Fixed Telephony
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Segment Highlights
Revenues
Revenues from fixed telephony services, on both the retail and the wholesale market, continued to decline in 2013, falling to RON 1.9bn – a 5%
drop on a 2013 figure that itself represented an 8% decrease on 2012. Fixed telephony accounted for 13% of total revenues from IT&C services,
according to ANCOM. Demand for fixed-line telephony is expected to decline as mobile telephone usage replaces fixed-line usage.
Fixed/Mobile integration
Fixed voice services have become mostly a retention tool that is offered as part of a fixed/mobile service bundle. However, consolidation and
integration between fixed and mobile services is just starting in Romania.
Traffic
In contrast to mobile telephony, traffic in public fixed-line telephony has continued to decline, falling by 13.5% y/y to 3bn minutes in 2014, after
dropping by 11.7% in 2013. The biggest decline was recorded by internet access traffic (for dial-up and ISDN access) which slipped 67%, due to
users' switch to faster broadband connections. Traffic to fixed networks decreased by 13% and to mobile networks by 6%. The only upward trend
was the one maintained by traffic to networks outside Romania, which rose by 4%, most likely supported by important diaspora communities.
According to the Romanian government, 6-8mn Romanians live outside the country's borders.
Outlook
The Romanian government, which still controls a 46% stake in fixed-line operator Romtelecom – currently rebranded as Telekom Romania
Communications – is expected to make a decision in 2015 about selling its shares. A possible listing of Romtelecom shares was announced for
2014, but procedures have dragged on and flotation is now not expected to occur sooner than 2016.
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Key Segment Data
Access lines/subscribers to fixed telephony services, mn
4.68
4.04
31-Dec-11
4.71
4.65
4.57
4.04
4.01
31-Dec-12
subscribers
Fixed telephony penetration rates (%)
31-Dec-13
51.3%
3.96
31-Dec-14
50.8%
51.0%
49.9%
23.2%
23.1%
23.5%
22.9%
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
Penetration rate per 100 inhabitants
lines
Penetration rate per 100 households
Comments
There are 44 active fixed telephony providers on the Romanian market, which in 2014 recorded decreases in terms of both number of access lines (3%
lower at 4.6mn) and number of subscribers (down 2% to 4mn).
As of end-2014, the fixed telephony penetration rate per 100 inhabitants had decreased to 22.9%, from 23.5% at end-2013, while the fixed telephony
penetration rate per 100 households was 49.9%, down from 51% in the previous year.
Source: ANCOM
- 15 -
Key Segment Data (cont'd)
Fixed number portability, thousands
Traffic volume on the fixed public telephone networks
1
468
1
383.3
310.6
1
0.11%
5.2%
21.9%
0.09%
6.1%
24.8%
0.08%
7.1%
26.0%
Voice traffic to
networks
outside
Romania
(international)
1
0
89.5
72.7
Voice traffic to
mobile
networks
72.9%
69.1%
66.9%
84.7
Voice traffic to
fixed networks
0
2012
Ported numbers
2013
2014
0
2012
Cumulated no. of ported numbers as of Oct 2008
Source: ANCOM
- 16 -
Internet and
SMS traffic
2013
2014
Market Shares
Market share
 Telekom Romania Communications (former Romtelecom)
has the highest number of clients for fixed telephony
services, with 2.2mn voice telephony lines (including
CDMA) at the end of 2014, followed by RCS&RDS with
1.5mn clients.
RCS-RDS 33%
 The other prominent company offering services in the
fixed-telephony segment is UPC Romania, one of the
leading cable companies and internet service providers.
UPC 11%
 Vodafone is considering entry into the fixed telephony
market via an acquisition. According to media reports in
late 2014, Vodafone Group was exploring the possibility of
merging with Liberty Global, the owner of UPC, the
second player on the cable TV market and the third player
on the fixed telephony market.
Vodafone 3%
Telekom
Romania
Communication
s 53%
Source: EMIS Insight, Vodafone
 The entrance in 2007 of the two main mobile operators –
Vodafone (UK) and Orange (owned by France Telecom) –
injected further competition into the fixed-line market.
However, their call tariffs are higher than those of the
leading providers, their main target customers being those
without access to wireline networks (in rural or suburban
areas).
- 17 -
III. Mobile Telephony
- 18 -
Segment Highlights
Revenues
Revenues from mobile telephony services, both on the retail and the wholesale market, reached RON 6.9bn (EUR3.2bn) in 2013. This total
represented 48% of total revenues from the provision of electronic communications networks and services, but also marked an absolute decrease
of 6.46% y/y, according to ANCOM. In 2014, revenues of the four mobile telecom operators active in Romania reached EUR 2.4bn, significantly
lower than in the previous year, due to a challenging macroeconomic, competitive and regulatory environment.
Prices
The EU roaming regulations introduced in 2014 – which imposed lower prices for mobile phone calls, SMS and data traffic – also influenced the
Romanian operators, who came up with new options and tariff plans. The low level of these charges might mean not just an intensification of
competition among existing operators but also a lowering of the barriers to market entry by mobile network virtual operators (MNVOs). The first
virtual mobile operator entered the Romanian market at the start of 2015.
New entry
In March 2015, Lycamobile, the largest mobile virtual network operator in the world, launched its services in Romania, which became the 18th
country in its international network. Over the next year, the operator aims to boost its subscriber base by 25%. Romanians can make international
calls for 1 eurocent/minute using prepaid SIM cards from Lycamobile. The company's operations have been launched through a partnership with
Telekom Romania.
Outlook
Further market consolidation is expected on the mobile telephony market, as operators seek new clients and integration of services. The market
could also see consolidation via partnerships between large telecom operators. According to media reports, these are holding talks to close
strategic collaborations aimed at joint development and use of networks. Such alliances could help mobile service providers to expand on the fixed
services market and fixed service providers to have access to mobile networks.
- 19 -
Key Segment Data
Mobile telephony users
22.9
22.8
16.2
22.9
16.1
13.5
15.3
13.5
9.4
9.3
active users (postpaid
and “active” prepaid
cards)
13.1
 The number of active users on the mobile telephony
market remained unchanged at the end of 2014, at
22.9mn. Despite this, the usage rate of mobile telephony
services continued to rise, most likely due to lower
interconnection prices.
post paid users
9.8
valid prepaid cards
 Interconnection tariffs on the mobile market in Romania
have been subject to gradual reductions in recent years,
as a result of regulations imposed by ANCOM.
active prepaid cards
12/31/2012
12/31/2013
12/31/2014
 As a result, the total voice traffic on mobile networks
(excluding roaming) rose by 5.3% in 2014 compared with
2013, to 67bn minutes.
Mobile Telephony Penetration Rates
127.2%
127.0%
113.6%
12/31/2012
126.1%
114.5%
114.9%
12/31/2013
12/31/2014
 The demand for pre-paid mobile services in Romania has
traditionally been very strong. There are 15.3mn pre-paid
mobile users in the country, compared to 9.8mn users of
subscription services. The majority (67%) of all mobile
calls in Romania are made by pre-paid users.
 Mobile penetration for valid SIM cards stood at 126%, as
of end-2014.
Valid SIM card penetration rate per 100 inhabitants
Active SIM card penetration rate per 100 inhabitants
Source:
- 20 -
Traffic volume on mobile networks
\
Voice traffic volume, retail market (%)
Voice traffic, wholesale market, (mn minutes)
1
+ 34.2%
1.9%
3.3%
9.5%
10.2%
3.2%
3.2%
13.6%
1
+ 12.8%
to international
networks and
networks with
satellite
transmission
+ 9.5%
+ 22.4%
to fixed public
networks
+ 5.6%
+ 5.7%
+ 6.2%
14,324
1.4%
3.7%
+ 34.0%
on own mobile
networks
0
2007
7,697
80.0%
2008
2009
2010
2011
9,466
8,954
to other terrestrial
mobile public
networks
7,290
84.6%
5,952
0
85.4%
8,176
1
2012
10,678
1
2013
Voice traffic terminated on mobile telephone networks, mn minutes
0
2012
2013
y/y evolution
2014
Source: ANCOM
- 21 -
2014
Traffic volume on mobile networks (cont'd)
Dynamics of the traffic volume achieved in outbound int. roaming
2012
2013
2014
359
423
647
94
105
196
265.0
318.0
451.0
outgoing SMS traffic (mn)
105
112
123
outgoing and incoming MMS
traffic (mn)
0.7
0.8
1.1
total voice traffic, of which (mn
minutes)
outgoing calls (mn minutes)
incoming calls (mn minutes)
internet access and data
transmission (including MMS)
traffic (thousand GB)
Dynamics of SMS, MMS and 3G video calls traffic (except roaming)
SMS total traffic (mm)
MMS total traffic (mn)
3G video calls traffic(mn minutes)
14
34
202
2012
2013
2014
13,873
16,904
19,499
15
15
17
1.6
1.3
1.1
Comments
The traffic volume achieved in outbound international roaming has continued to rise over the last few years, with the most significant increase registered by
internet access and data transmission services.
The country has great potential in terms of mobile internet and the number of users is expected to increase significantly, also supported by smartphone
sales. The smartphone market is forecast to increase by 30% in 2015, from the level of 2.5-2.7mn units sold in 2014.
Source: ANCOM
- 22 -
Market concentration
Mobile telephony market concentration degree
3,823
3,818
3,740
3,748
3,592
3,487
3,526
3,482
3,413
3,287
3,206
3,202
2010
2011
HHI trafic de voce (exclusiv roaming)
3,247
3,262
2012
2013
HHI trafic SMS (exclusiv roaming)
3,262
2014
HHI cartele "SIM" active
Comments
Measured by the widely accepted Herfindahl-Hirschman Index (HHI), the concentration of the mobile services market in Romania is high, considerably
exceeding the score of 2,000 that is commonly treated by competition authorities as the threshold for a seriously concentrated market. Romania’s HHI has
not changed radically in recent years, its values recording a slight increase in each of the three segments calculated. The index for the voice traffic segment
has seen the highest growth, reaching the level of 3,823 in 2014.
This HHI index stability is due to the stability of the market shares of major mobile operators in Romania. Although it has not undergone a really noteworthy
change in recent years, the market share of the leader is on an upward trend, to the detriment of its competitors.
Source: ANCOM
- 23 -
Market Shares
Market share by SIM cards
Vodafone
29.2%
 Currently, the mobile telephony market includes four
operators – Orange, Vodafone, Telekom Romania and
RCS&RDS.
Telekom
22.8%
 According to the Body of European Regulators for
Electronic Communications (BEREC), quoted by
Romania's Competition Council, the situation at endJanuary 2014 was as follows: Romania’s mobile
telephony market leader had a market share of around
43% and its main competitor covered 29.2% of the
market, while the remaining 27.8% was shared between
other operators (with the majority of the latter owned by a
company with a share of 22.8%). Market shares were
calculated based on the number of active SIM cards.
RCS RDS 5%
Orange 43%
Market share by total revenues, 2014
Telekom 18%
Vodafone 27%
 At the end of 2014, Orange Romania had 10.5mn mobile
clients, while Vodafone Romania had 8.06mn users of
mobile services, followed by Telekom Romania with
5.9mn mobile subscribers. RCS&RDS does not publish
data on its clients, but according to estimates of local
business daily Ziarul Financiar, its mobile telephony
clients number around 1.1mn.
RCS RDS 18%
Orange 37%
Source: BERC, company data
- 24 -
ARPU
Monthly Blended ARPU, RON
Mobile number portability, thousands
1,304
28.3
824
26.9
623
26.2
25.7
480
25.4
25.2
25
25
166
2012
201
2013
2014
Ported tel. numbers
2012
2013
2014E
2015F
2016F
2017F
2018F
Cumulated number of ported telephony numbers as of Oct 2008)
2019F
Comments
The rate of decline in average revenue per user (ARPU) accelerated in 2014, as a result of regulatory cuts to mobile termination rates (MTRs) implemented
in April 2014. Operators' data for the end of 2014 also indicates that the cuts to MTRs resulted in decreases of ARPU. BMI Research estimates that the
market average monthly blended ARPU declined to RON26.2 in 2014.
However, according to BMI Research, ARPUs have the potential to rise again as more expensive 4G services are rolled out in the country and operators
promote value-added services such as mobile payments (an example is Vodafone's launch of mobile payment service M-Pesa, which it sees as having
significant growth potential).
Source: BMI Research, ANCOM (right)
- 25 -
Operator switching
Yearly evolution of the trend of ported numbers since the service launch
564,648
260,256
255,893
2011
2012
221,219
274,137
180,239
15,681
2008
2009
2010
2013
2014
Comments
Between the introduction of number portability in October 2008 and the end of 2014, the cumulative total of numbers ported in Romania reached 1,772,073.
Of these, 1,304,091 (74%) were mobile and 467,982 (26%) were fixed telephone numbers. An interesting y/y doubling of numbers ported took place in
2014, after rather gradual growth between 2009 and 2013.
According to Ziarul Financiar, RCS&RDS remains the operator that has drawn the highest number of clients away from other networks. Thus, in the first four
months of 2015, RCS&RDS topped the list, followed by Vodafone, Orange and Telekom Romania.
Source: ANCOM
- 26 -
IV. Internet Services
- 27 -
Segment Highlights
Revenues
Users, Speed
Connectivity
EU
comparison
E-commerce
In 2013, revenues from internet access services amounted to RON 2.6bn, up 17% on the previous year and representing 18%
of total IT&C services, according to ANCOM data.
Romania had 16mn broadband internet connections as of end-2014, of which 12mn were mobile (up 25% y/y) and 4mn were
fixed (up 6% y/y).
Romania has progressed in terms of connectivity, as increasing numbers of people are subscribing to fast broadband networks
(59% of fixed subscriptions are to a fast connection, in comparison to 54% in 2013). The country, in fact, ranks 2nd in the entire
EU in this area.
Romania has the lowest percentage of regular Internet users in the EU (48%), well below the EU average of 75%. Similarly, the
proportion of the Romanian population that has never used the internet is as high as 39%, compared to the EU average of
18%.
Romania ranks last among EU countries in respect of the share of internet users who shop online: that percentage is just 11%,
compared to an EU28 average of 59%, according to EU statistics office Eurostat.
Only 7.3% of SMEs in Romania sell online, with these sales making up just 4.3% of their turnover.
- 28 -
Key Segment Data
Internet Users/Subscribers, mn
11.7
11.1
10.5
14.4
13.8
13.1
12.4
9.4
4.3
2011
2012
2013E
2014F
2015F
Internet users
2016F
2017F
Broadband internet subscribers
Evolution of the penetration rates of active mobile internet access connections
81.1%
68.2%
60.2%
50.4%
35.5%
48.0%
7.2%
7.9%
8.8%
2012
2013
2014
penetration rate of active mobile connections per 100 inhabitants
penetration rate of active mobile broadband connections by CDMA, EDGE,3G, EV-DO, 3G+, 4G per 100 inhabitants
penetration rate of active mobile broadband connections via modems/cards/USB per 100 inhabitants
Source: BMI Research, ANCOM
- 29 -
6.2
6.1
5.9
5.7
5.4
5.1
4.8
2018F
Internet Access Providers
Number of operational internet access providers, by access means
2012
2013
2014
Total number of internet access providers
896
793
775
fixed broadband access services
894
791
773
coaxial cable access
40
36
34
fiber optic access
177
170
171
radio access
186
159
164
UTP/FTP cable access
770
659
635
xDSL access
12
14
10
mobile access services
6
6
6
Comments
In 2014, the broadband market structure comprised 773 operators providing fixed broadband internet access (down from 894 in December 2012). Of these,
34 operated by cable networks, 171 by fibre, 164 by radio, 10 by xDSL, and 635 by UTP/FTP cable.
The market consolidation process is expected to contribute further to the decline in the number of providers.
According to estimates of BMI Research, Romania had 11.7mn regular internet users at the end of 2014, taking into account the growing number of internet
users who access the internet via mobile broadband devices or USB sticks.
Source: ANCOM
- 30 -
Mobile Connections
5,878
2012
7,136
10,124
2012
2013
6.4
12.0
4.8
35.4%
13,647
4.8
9,617
9.6
8,184
3.1
22
60.2%
47.9%
16,172
4.0
2013
10,693
12,001
7.1
709
2014
Mobile broadband access
5.6
Total mobile internet access
2014
mobile broadband connections
mobile broadband connections - subscriptions
mobile broadband connections - prepaid cards
4G connections
3G and other superior to 3G connections
Broadband connections
Total mobile internet access connections
Comments:
Comments:
The total number of mobile internet access connections increased 19%
y/y in 2014, to 16mn. Of these, broadband connections numbered 12mn
– a 25% growth on 2013.
The majority of mobile broadband connections (53%) were by way of
subscription-based cards.
The growth of the total number of connections also led to an increase of
the mobile broadband penetration rate, to 60.2% at end-2014 – which
represents rises of 12% and 25%, respectively, compared to end-2013
and end-2012.
Out of the 12mn mobile broadband connections, 10.7mn were using 3G
and 3G+ technology and 0.7mn were achieved through 4G technology.
All these connections generated total traffic of more than 46,000
terabytes, according to sector watchdog ANCOM.
Source: ANCOM
- 31 -
Fixed Connections
Fixed broadband connections (mn)
Support types (%)
xDSL
connections
25.9%
20.1%
18.9%
UTP/FTP
cable
connections
58%
3.5
3.8
4.0
17.6%
2012
2013
2014
fixed broadband connections
Comments
Comments
 Fixed broadband connections registered an annual growth of 5% in
2014, reaching 4mn and generating a total annual traffic of 3.6mn
terabytes, while the penetration rate per 100 inhabitants reached
20.1%.
 Out of the total 4mn connections, 2.9mn were installed in urban areas
(up 4.2% y/y), while rural areas registered an increase of 10.2% in
connections during 2014, bringing the rural total up to 1.1mn
connections.
 Residential users accounted for 91% of the fixed broadband
connections that had been installed . Business users accounted for
the other 9% – that is, for less than 400,000.
 As regards the main support types, the structure of fixed internet
access connections remained almost unchanged from 2013, with
some 2.3mn UTP/FTP cable connections (58%), 1mn xDSL
connections (25.9%), and half a million coaxial cable connections
(11.6%).
Source: ANCOM
coaxial cable
connections
11.6%
- 32 -
Internet speed on fixed broadband connections
Evolution of the no. of fixed broadband internet access connections, by transfer speeds
144kbps - 2Mbps
1.95
2-10Mbps
1.17
0.99
0.88 0.94
0.93
0.71
0.67
0.07
0.60
0.06
2012
0.96
0.93
10-30Mbps
0.44
30 - 100Mbps
0.06
2013
2014
over 100Mbps
Comments
• The average download speed of fixed broadband connections in Romania is 72.15 Mbps, the third highest in the world, after those in Singapore and
Hong Kong, according to the Ookla Global Net Index. The result is staggering, but it is to be taken very seriously indeed: Ookla, which compiles the
index, is a global leader in broadband testing and web-based network diagnostic applications.
• In Romania, prices for internet access are among the lowest in Europe. Despite this, providers have continued to expand the communications
infrastructure, and a large share of population now has access to latest-generation technologies.
Source: ANCOM
- 33 -
Recent Developments
Internet Speed
As regards high-speed internet access, Romania performs better than the EU at large. Networks capable of providing at least 30 Mbps are available
to two-thirds (66%) of Romanian households (against 62% in the EU overall). In terms of take-up, 60% of fixed internet subscriptions are to highspeed connections, although the overall level of take-up remains low (25th in the EU).
Internet connection
In 2014, Romania achieved one of Europe's highest coverage rates for ultra-fast fixed internet (over 100Mbps), as well the highest consumption of
mobile telephony services per user in the European Economic Area, ANCOM said in its 2014 annual report.
Nine cities in Romania are among the top 15 cities in the world in terms of download speed of fixed broadband internet connections, according
to the Ookla Global Net Index.
EU Funds
Romania has launched the Ro-NET project, worth EUR 83mn, which uses EU structural funds to build up broadband infrastructure in areas still
uncovered.
The project will cover 783 of the 2,268 localities identified as "blank areas" and will contribute to narrowing the digital gap between urban and rural
areas, bringing broadband internet closer to approximately 130,000 households, 400,000 people, 8,500 enterprises and 2,800 public institutions.
- 34 -
V. Television
- 35 -
Key Segment Data
Subscribers (mn)
87.2%
80.5%
50.7%
29.3%
92.4%
55.1%
58.6%
31.4%
32.9%
4.38
4.12
3.79
0.5%
0.7%
0.9%
2013
2014
2006
Household penetration rate %
household penetration rate for cable networks%
household penetration rate for DTH %
household penetration rate for IPTV %
2.46
2.35
2.19
0.068
0.054
0.037
2012
6.91
6.53
6.02
2007
2008
cable network subscribers
satelite network subscribers (DTH)
IPTV subscribers
total number of subscribers
Comments
• In 2014, there was a 5.9% increase in the total number of subscribers to audio-visual programme retransmission services provided on a commercial
basis. The end-year number reached 6.9mn (compared to 6.5mn at end-2013).
• Most subscribers are cable TV subscribers – numbering 4.4mn at the end of 2014 (up 6.3% on 2013) – while 2.5mn are direct-to-home TV service
subscribers (up 4.7% on 2013) and around 70,000 are IP TV subscribers (26% more than in 2013).
• The penetration rate at household level reached 92%, according to the data the providers reported to ANCOM.
Source: ANCOM
- 36 -
TV Services Providers
No of providers
2012
2013
2014
Total no. of active providers
404
363
294
on cable networks
400
359
290
on satellite networks (DTH)
3
5
5
on IP technology (IPTV)
3
2
2
 Given the significant appetite of Romanian users for
television programs, cable networks have developed
rapidly, with providers diversifying their services, by
offering packages that include Internet and voice.
 On the pay-TV market, three companies are competing in
practically all communications sectors: these are
RCS&RDS, UPC Romania and Romtelecom, which have
interests in cable, satellite, broadband and, in some
cases, also telecommunications and IPTV.
Market players by cable & satelite TV clients (mn)
 RCS&RDS has the largest number of cable and satellite
TV clients – a result both of its aggressive price policy and
of its acquisitions of smaller players.
Telekom 1.3
 Another important player on the TV market is AKTA, the
largest independent cable TV service provider
in Romania, which operates via two companies, Digital
Cable Systems (DCS) and AKTA Telecom. The company
is also an active buyer of smaller rivals, as it plans to
consolidate the customer base and expand coverage to
new areas.
UPC 1.2
RCS RDS 3.2
Orange 0.11
Source: ANCOM, company data, estimates by Ziarul Financiar daily
- 37 -
Advertising Market
Advertising market (EUR mn)
28
28
17 18
2013
TV
56
51
46
19 19
16 18
2014
print media
 The Romanian advertising market amounted in 2014 to
EUR 313mn, up 2.6% y/y, and in 2015 is expected to
reach EUR 322mn, due to a positive macroeconomic
environment. These are among the conclusions of the
2015 edition of Media Fact Book, a report released by
media agency Initiative.
 Television remained the leading mass medium for
advertising, with a 63% share of the market.
 In Romania, the main players in the television market are
Central European Media Enterprises (CME) and the Intact
Media Group.
 In 2014, CME had a 62% share of the local TV advertising
market, making USD 126mn on this segment, according
to its financial report for 2014. The group had about a
quarter of the total TV audience in Romania and more
than 30% of the combined prime time audience.
 CME owns Romania's largest TV station PRO TV, as well
as several niche TV stations and online portals.
 Intact Group, which owns the Antena 1, Antena 3, Antena
Stars, Euforia Lifestyle and ZU TV channels, had a 23%
share of the TV advertising market in Romania in 2014.
 The other sizeable competitors are Kanal D, with a 5%
market share, and Prima TV, with 4%.
205
198
193
Comments
radio
27
2015E
outdoor
online media
Source: Media Fact Book 2015, Initiative agency
- 38 -
Recent Developments
Revenues
Revenues from audiovisual media programme services rose by 1.6% y/y in 2013, according to ANCOM, and are expected to have risen further in
2014, due to improved macroeconomic conditions and higher investments in the sector.
Romania’s advertising market is also on a path of strong recovery, with investments in TV ads making the biggest contribution.
Market consolidation
The TV services market is expected to consolidate further as companies plan to increase their customer bases and expand coverage to new areas.
RCS&RDS and AKTA are the companies most active on the M&A front, in their search for clients and niche services. At the end of 2014, RCS&RDS
reached an agreement with Central European Media Enterprises (CME) to acquire all of the latter's Romanian radio licences (comprising Pro FM,
Info Pro, ProClasic, Music FM and Dance FM). The deal value was around EUR 4mn according to market estimates. The acquisition is in line with
RCS&RDS' aim of building an integrated media portfolio.
Digital Television
By June 17, 2015 Romania has to switch off the analog signal and make the transition to digital terrestrial television. However, the switch may be
subject to delays in implementation. Five companies – 2K Telecom, Radio M Plus, Regal, Cargo Sped and Digital Video Broadcast – have
submitted applications to participate in the second procedure allocating digital terrestrial television multiplexes, which will be granted for 10 years.
- 39 -
VI. Telecom Sector Headlines
Vodafone, UPC
merger
Vodafone is considering the potential acquisition of Europe's leading cable operator Liberty Global,, in order to counter
impending consolidation among rivals in Britain, Reuters has reported. In Romania, Liberty Global owns UPC Romania.
Vodafone
lawsuit
Vodafone, the second-largest mobile telephony provider in Romania, has started legal proceedings against communications
market watchdog ANCOM, seeking EUR 15.1mn damages to compensate for its inability to use part of the radio spectrum
acquired at auction from the Romanian government in 2012, telecom sources have told Ziarul Financiar daily. More precisely, it
is claimed that interference from Ukrainian communications companies is rendering Vodafone unable to use part of the radio
spectrum bought in 2012 in more than 20 of Romania's 41 counties – such use having been promised in the conditions of
contract at the time of the auction.
Vodafone
assets in
Romania
Vodafone should sell its assets in several countries, including Romania, Australia, Hungary and the Czech Republic, where it is
not a market leader and where it does not have access to landline telephony infrastructure, according to a report of UBS’
brokerage division, quoted by the UK daily Financial Times. In the long term, Vodafone could be taken over or could consider a
deal to restructure its business in these countries, said UBS, with the potential buyers being American giant AT&T and
SoftBank, the third telecom operator in Japan.
Pinebridge
seeks buyer
for AKTA
Investment fund Pinebridge, the owner of Romanian cable TV operator Digital Cable Systems, which operates under the brand
name of AKTA, is looking to sell the unit for around EUR 200mn. The fund has rejected offers worth around EUR 100mn for the
unit, which is the largest independent player on the local market, Ziarul Financiar has reported, quoting unnamed sources
familiar with the talks.
- 40 -
VII. Main Players
- 41 -
Top M&A Deals
Top 10 M&A Deals in the Telecommunications Sector in Romania in 2014 and 2013
Date
10-Nov-13
Target Company
Deal Type
GTS Telecom SRL; GTS Central Europe; GTS Hungary;
Acquisition
GTS Czech s.r.o.
Buyer
Country of
Buyer
Deal Value
USD (mn)
Stake
(%)
Deutsche Telekom AG
Germany
730
(Official data)
Belgium
10.84
(Market
0.93
estimate)
100
18-Mar-14 Orange Romania
Minority stake
purchase
Atlas Services Belgium SA
25-Sep-14 Ad Net Market Media SA
Acquisition
Infratel Net SRL; Andrei George Bratu - private
Romania
investor
N/A
100
22-Jul-14
Vesatel
Acquisition
RCS & RDS
Romania
N/A
100
16-Jul-14
Diginet SA
Acquisition
Clever Media Network
Romania
N/A
100
26-Feb-14 Electrosim SRL; Vianet
Acquisition
RCS & RDS
Romania
N/A
100
23-Dec-13 SBS Broadcasting Media
Acquisition
Cristian Burci - private investor
Romania
N/A
100
23-Dec-13 P7S1 Radio Holding SRL
Acquisition
Antenna Group
Greece
N/A
100
18-Oct-13
GSP TV; Antena Play
Acquisition
Orange Romania
Romania
N/A
n/a
16-Oct-13
Digicom Systems
Acquisition
Ines Group
Romania
N/A
99.01
Source: EMIS DealWatch
- 42 -
M&A Activity (2013-2014)
Comments:

Number of Deals by Deal Value, USD (%)
IT&C was the most dynamic sector in terms of number of
transactions made in 2014, according to a PwC Romania analysis
released at the start of 2015.
Undisclosed;
85.7%
500.1-1000;
7.1%
 An important rise in the M&A activity in Romania is expected for
2015, boosted by improved prospects for economic growth and the
return of investors' confidence.
0-50mn; 7.1%
Number of Deals by Deal Type (%)
Number of Deals by Region of Investors (%)
Belgium 7.1%
Austria 7.1%
Acquisition
92.9%
Romania
71.4%
Minority stake
purchase 7.1%
Greece 7.1%
Joint Venture
0.0%
Privatisation
0.0%
Source: EMIS DealWatch
Germany 7.1%
- 43 -
Telekom Romania
Highlights
2012
2013
Total Revenue
 Germany's Deutsche Telekom entered the Romanian
market in 2008, when it acquired a 20% stake in Greek
telecom operator OTE, the majority owner of fixed line
operator Romtelecom, cellphone operators Cosmote and
Telemobil, mobile phones store Germanos and battery
retailer Sunlight.
 In 2011, following several stages, Deutsche Telekom
increased its shareholding to 40% in OTE.
 Starting with September 2014, Romtelecom and Cosmote
have been operating under the Deutsche Telekom brand
and were renamed Telekom Romania and Telekom
Romania Mobile. The other company names and brand
identities were not changed.
 In 2014, DT recorded total revenues of EUR 1bn in
Romania, down 1.5% against the previous year, while
EBITDA adjusted for special factors reached EUR 266mn,
down 6% from 2013.
 Telekom Romania had a 30% market share in 2014, as
turnover.
• The company plans EUR 160mn investments in 2015 to
develop its communications infrastructure. It also plans to
sell old and collateral assets to help finance its
development.
266
1,002
283
1,017
289
1,037
Income Statement (Unconsolidated, EUR mn)
2014
EBITDA adjusted for special factors
Romanian operations of Deutsche Telekom, thousands
1,199
2014
1,193
2013
1,134
2012
Broadband lines
2,239
2,369
2,422
Fixed network lines
6,047
6,153
6,368
Mobile customers
Source: Deutsche Telekom
- 44 -
Telekom Romania Communications (ex Romtelecom)
Income Statement (Consolidated, EUR mn)
Highlights
26.8%
 Telekom Romania is one of the largest telecom operators
in the country. It is owned by OTE Group (54.01%) and
the Ministry for Information Society (44.99%).
620
 Telekom Romania provides traditional fixed-network
telephony, broadband Internet, TV services (satellite,
IPTV and cable, including its own sports TV channel,
Dolce Sport), and ICT services.
 According to Deutsche Telekom data, TV and Internet
services continued to have positive trends, both in terms
of customer base and revenues, while the company
posted a growing RGUs base of over 4.85mn for the end
of 2013.
149
609
24.2%
 In 2014, the company recorded a 0.1% drop in total
revenues, reaching EUR 609.1mn, while EBITDA was up
1% at EUR 149mn.
2012
Revenues
2013
EBITDA
6.6
8.4
57.3
148
166
610
24.5%
 The company employs 6,029 people as of end 2014, a
number which decreased by 11.3% compared with the
previous year.
2014
EBIT
EBITDA margin
Source: OTE
- 45 -
Telekom Romania Communications (cont'd)
Operations, mn
Highlights
1.41
2014
1.23
2013
1.25
2012
1.27
1.20
 The company lost 3.2% of its fixed voice telephony lines
in 2014 to 2.18mn subscribers, while broadband internet
subscribers fell by 1.4% to 1.23mn. However, TV
subscribers rose 4.5% to 1.41mn compared with 2013.
 Romania's government still controls a 46% stake in
Telekom Romania Communications (former Romtelecom)
and is yet to decide about selling its shares.
2.18
1.35
2.25
2.33
TV subscribers (DTH, IPTV& Cable)
Broadband subscribers (Incl. CDMA BB)
Voice Telephony Lines (Incl. CDMA)
 According to media reports in early May, quoting PM
Victor Ponta, the government plans to list shares in the
telecom provider, on the London and Bucharest stock
exchanges either in 2015 or 2016.
Ownership Structure
Ministry for
Information
Society (MSI)
45.99%
 Deutsche Telekom is interested in acquiring the minority
stake in the fixed line operator, Ziarul Financiar daily
reported, quoting Claudia Nemat, a member in DT board.
The company could be valued at EUR 800mn and the
state's stake at EUR 370mn, considering the 2014 pro
forma EBITDA of EUR 160mn.
OTE
International
54.01%
Source: OTE
- 46 -
Telekom Romania Mobile Communications (ex Cosmote)
Income Statement (Consolidated, EUR mn)
Highlights
25.9%
 Telekom Romania Mobile Communications, which is part
of the DT-owned Cosmote Group, launched commercial
operations in December 2005.
25.8%
 The company is the third largest telecom operator on the
local market, after Orange Romania and Vodafone
Romania.
 Its shareholding structure includes Cosmote Group, part
of OTE Group, with a 70% stake and Telekom Romania
Communications (former Romtelecom), with a 30% stake.
2012
Revenues
2013
Pro Forma EBITDA
 Telekom Romania expanded 4G population coverage in
Bucharest to 90%, while also expanding the service on
mobile phones through a variety of handsets.
106
439
119
459
120
463
24.0%
 In 2014, the company recorded a 4.2% decrease in total
revenues, reaching EUR 439.4mn, while pro forma
EBITDA went down 11.2% to EUR 105.6mn.
2014
Pro Forma EBITDA margin
Source: OTE
- 47 -
Telekom Romania Mobile Communications (cont'd)
Mobile subscribers, mn
Highlights
6.30
 By the end of 2014, Telekom Romania Mobile’s total
customer base stood at 6mn, of which 26.8% was
postpaid.
6.09
5.95
2012
2013
 According to OTE, Blended Average Revenue per User
(ARPU) decreased by 8.5% in 2014 compared to 2013,
due to lower incoming ARPU, adversely affected by
interconnection rate cuts as well as the aggressive
competitive environment.
2014
Ownership Structure
 According to Telekom Romania's strategy for 2015, the
company will continue transferring current customers to IP
(Internet Protocol) technology and the group will continue
to expand its fiber optic network, estimated to cover 1mn
households by the end of 2015 and 2mn by the end of
2016.
Telekom
Romania
Communication
s S.A. 30%
 At the same time, 4G coverage is set to double by the end
of 2015.
Cosmote
Mobile
Telecomunicati
ons SA
(Greece)
70.0%
Source: OTE
- 48 -
Orange Romania
Income Statement (Individual, RON mn)
Highlights
2013
EBITDA
 The telecom operator is the 4G leader in Romania with
coverage of 65% of the population at 31 March 2015.
193
645
2,121
501
1,300
518
2012
Net revenues
 Orange Romania, the local unit of France Telecom's
Internet and mobile arm Orange, is the biggest mobile
phone service provider in the country by customer base
and turnover.
30.4%
30.0%
4,337
1,420
4,119
34.5%
H1 2014
Net Profit
 The company agreed to provide voice mobile
communication services coverage of 80% of the population
by 5 April 2017 and Broadband data mobile communication
services of 30% of the population by 5 April 2019, for 1.8
GHz and 2.6 GHz bands.
EBITDA margin
2013
Shareholders' equity
 According to consolidated results published in February
2015, Orange Romania revenues fell by 2.7% to EUR
909mn in 2014, mainly due to a cut in interconnection
tariffs.
1867
4,777
2012
Total Assets
2.89
2,466
942
2,361
1.11
0.66
1442
4,259
2,233
3,591
Balance Sheet (Individual, RON mn)
 Orange has announced plans to invest EUR 500mn
in Romania over the next three years.
H1 2014
net debt
Net Debt/EBITDA
Source: EMIS
- 49 -
Orange Romania (cont’d)
Mobile customers, thousands
Highlights
10,531
 The company’s number of clients grew by 95,000 to
10.5mn mobile customers at the end of 2014.
10,436
10,365
 The number of internet customers was 19,000 at the end of
H1 2014.
10,283
end 2012
end 2013
end 2014
 In 2014, mobile internet traffic jumped 85% on the year.
Also, the sales of 4G smartphones and tablets were 4 times
higher in the last quarter compared to the same period in
2013.
Q1 2015
ARPU per month (annual rolling, EUR)
6.8
6.8
6.7
6.6
6.4
6.4
6.4
6.5
6.5
6.4
6.3
 ARPU was EUR 6 per month in Q1 2015, down from EUR
6.2 in the previous quarter.
 Romania is the first country where the French telecom
operator will be launching a new product for its television
services: Orange TV stick that connects the TV to a
smartphone or tablet. At the end of 2014, Orange TV had a
total on 157,000 subscribers.
6.2
6.0
 Orange entered the local television market through the
release of Orange TV in June 2013.
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Source: Orange
- 50 -
Vodafone Romania
Highlights
1,045
2013
EBITDA
471
174
30.2%
1,558
431
2012
Net revenues
 Vodafone Romania, the second leading mobile telephony
provider in the country, a wholly owned subsidiary of
British Vodafone Group plc, was launched in April 1997 as
the first GSM network in the country.
31.7%
502
3,298
1,176
3,457
34.0%
 The company provides a wide range of services, including
voice, messaging, data across mobile and fixed networks,
having a market share of 38% on the mobile segment,
behind Orange and a 3% market share on the fixed
segment, behind Romtelecom, RSD & RCS and UPC.
H1 2014
Net Profit
EBITDA margin
 In April 2005, Vodafone became the first operator to launch
3G services on the Romanian market. It also launched the
first 4G mobile data network in Romania, in October 2012.
3,399
1,794
 According to preliminary results for FY 2014/2015,
Vodafone Romania recorded revenues from services of
EUR 656.6mn, down 6.7% y/y. However, excluding the
interconnection fees cut, the company's revenues grew by
7.2% y/y in the period.
620
992
1.85
1.49
2012
Total Assets
1,933
3,229
852
1,750
3,290
3.81
2013
H1 2014
Net debt
Net Debt/EBITDA
Source: Vodafone
- 51 -
Vodafone Romania (cont'd)
Users, mn
Highlights
59.5%
 The company had 8.7mn clients, of which 8.1mn were
users of mobile services at the end of March 2015,
corresponding to the end of financial year 2014-2015.
 At the same time, subscribers accounted for 41.9% of the
customer base, while prepaid users were 58.1%.
 During the same time, the company had 43,000 fixed
broadband customers.
 Data consumption jumped by 75.6% y/y in the 2014/2015
fiscal year, as the company continued expanding its 4G
network coverage and following investments in technology.
 Vodafone also boosted its smartphones sales, by 49% y/y
in the period.
 The company plans to continue investments in Romania to
upgrade the 3G communications infrastructure and to
expand its 4G network.
 At the end of 2014, Vittorio Colao, Vodafone group CEO,
told Ziarul Financiar daily that the group plans to provide
fixed services in Romania and is also considering to launch
TV services, being open to discuss a merger or an
acquisition. Market sources quoted by the daily later said
Vodafone negotiated the takeover of Digital Cable Systems
(AKTA), the largest local independent cable TV provider,
held by Asian-American private equity firm Pinebridge,
which allegedly refused offers of around EUR 100mn.
8.08
8.19
8.06
59.3%
58.1%
2012
2013
users of mobile services, mn
prepaid cards
2014
Mobile ARPU, EUR
6.5
6.5
6.4
6.3
6.2
6.00
6.2
6.0
5.9
Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY
2012 2013 2013 2013 2013 2014 2014 2014 2014
Source: Vodafone
- 52 -
RCS-RDS
Highlights
40.6%

RCS&RDS is one of the largest Romanian and
Eastern European telecom companies, offering nation
wide satellite television, cable television, cable
internet, VOIP, and 3G services.

The telecom operator, controlled by businessman
Zoltan Teszari, provides services under Digi brand in
Romania, Hungary, Spain, Italy and Czech Republic.
The company is Romania’s biggest cable TV and
fixed internet service provider and is also growing in
the mobile telephony sector.
821
2,102
397
-14
88
116
36.7%
1,082
831
2,047
39.1%
2012

2013
Net revenues
EBITDA
H1 2014
Net Profit
EBITDA margin
9.72
The company employs more than 8,800 people and
its annual revenues stand at more than EUR 450mn
only in Romania.

RCS&RDS revenues are expected to decrease in
2014, following a divestment in Slovakia and
continued decline in satellite TV, according to ratings
agency Standard & Poor’s.

According to media reports, the company is reportedly
considering listing on a foreign stock exchange.
4.59
429
635
674
4.44
2012
2013
H1 2014
Total Assets

3,860
4,888
3,765
4,771
4,296
3,692
net debt
Net Debt/EBITDA
Source: EMIS
- 53 -
RCS-RDS (cont'd)
Ownership Structure
Sfetozar
Bugarszki
7.2%
Highlights
 The company has over 3.2mn clients for TV services, of
which over 2.4mn via cable, about 1.8mn clients for fixed
internet services and 1.5mn fixed telephony clients.
 The company's strategy envisages the exit from non-core
markets and the focus on Romanian and Hungarian
markets.
 In March 2015, RCS RDS sold its satellite TV operator Digi
TV in Czech Republic, as part of its strategy to exit noncore markets and focus on Romanian and Hungary. The
deal value was not disclosed.
 The company has also divested its Digi TV operations in
Croatia, Slovakia and Serbia.
 On the other hand, the company is pursuing an aggressive
expansion strategy, acquiring almost 100,000 new
customers mostly via companies close to the group since
the beginning of 2014, according to industry sources
quoted by Ziarul Financiar daily, paying more than EUR
10mn in the process.
 RCS&RDS has also announced plans to expand in the
energy market and become a power suppler, targeting
customers who are already subscribed to its telephony,
internet and TV services.
Nicusor Dorel
Schelean 7.0%
Mihai Patap
5.3%
Cable
Communicatio
ns Systems
NV
(Netherlands)
2.5%
Zoltan Teszari
58.9%
Other private
investors
18.8%
Source: EMIS
- 54 -
UPC Romania
Highlights
 UPC Romania is the 2nd largest cable television operator in
Romania. The company is affiliated to UPC Broadband, the
European division of U.S. group Liberty Global, one of the
world`s largest cable operators.
238
-10
-258
-230
-7
-1.5%
2012
-4.4%
2013
Net revenues
EBITDA
 It provides video, broadband internet, and digital (VoIP)
telephony services to 1.9mn service subscribers (RGUs)
represented by 1.2mn customers as of December 31, 2014.
-150
20
442
456
4.5%
 Last year, UPC Romania launched the wireless Internet
service UPC Wi-Free, which gives clients free access to
Internet outside of their homes. Four months after launch,
over 10% of the company's Internet customers already
used this service.
H1 2014
Net Profit
EBITDA margin
 Over 65% of UPC customers currently subscribe to digital
television services and over 35% of them get HD services.
846
-134.28
 UPC Romania recorded a growth of 6% of revenues in
2014, to USD 173mn, mainly due to improving Internet
services and boosting its Internet user base.
H1 2014
 The company employs around 1,600 people.
-578
-174.00
2013
2012
Total Assets
1,209
-428
826
-193
795
1,074
54.54
1,407
net debt
Net Debt/EBITDA
Source: EMIS
- 55 -
UPC Romania (cont’d)
RGUs as of December 31, 2014, thousands
Highlights
Internet 434
 In 2014, the company had 1.2mn video subscribers, of
which 548,000 were digital cable subscribers.
 It also had 434,000 broadband internet subscribers and
313,000 telephony subscribers in the same period.
Voice 313
Digital Video
873
• The company increased its internet subscriptions by 14%
and fixed telephony subscriptions by 12%.
Analog Video
306
• For 2015, the company plans investments of EUR 35mn for
new services and the upgrade and expansion of its
network, according to Severina Pascu, CEO of
UPC Romania and Hungary.
Services Penetration Rate
64.2%
56.7%
49.7%
19.5%
13.4%
2012
Digital Cable penetration
18.3%
13.4%
2013
Internet penetration
19.0%
• In May 2015, Liberty Global acquired Romanian cable
operator Tita & Company SRL from local entrepreneur Tiţa
Ion for an estimated EUR 2mn. The deal is in line with
Liberty Global's development plan, which is expected to
acquire several small local competitors active in both urban
and rural areas
13.7%
2014
Voice penetration
Source: UPC
- 56 -
Contact:
Corporate Headquarters
6-8 Bouverie Street
London EC4Y 8DD
UK
Voice: +44 20 7779 8100
Fax: +44 20 7779 8224
Americas Headquarters
225 Park Avenue South
New York, New York 10003
US
Voice: +1 212 610 2900
Fax: +1 212 610 2950
Asia Headquarters
Eucharistic Congress Bldg. No.
III
4th Floor, 5 Convent Street
Mumbai 400 001
India
Voice: +91 22 22881123
Fax: +91 22 22881137
Disclaimer:
The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness
of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional
Investor PLC take no responsibility for decisions made on the basis of these opinions.
Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. A Euromoney Institutional Investor company.
About EMIS Insight
EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation
and profiles of the leading sector companies provided by locally-based analysts.
About EMIS
Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in 1999. EMIS works from over 15 offices
around the world to deliver electronic information products, by subscription, to institutional customers globally. EMIS provides hard-to-get information covering more
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organisations, and others.
- 57 -

Telecommunications Sector Romania

Transcription

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