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Romania Broadband Overview

After the state started the liberalisation of the telecommunications sector in early 2003 Romania has become one of the most dynamic and competitive broadband markets in Eastern Europe. During the first six months of 2006, the alternative wired telephony reached 15% of the market, representing 50% growth year-on-year or 650.000 lines out of a total of 4.4 million. The total number of fixed telephony subscribers in Romania exceeded 19 million in mid-2006, compared with 15.6 million on 30 June 2005.

Romtelecom is the incumbent and national fixed line operator set up as an independent state-owned telecommunications and postal service provider in 1991. Today the Greek national telecoms company OTE owns 54.01% of Romtelecom which it acquired in two stages. Firstly in 1998 and secondly following the introduction of the new regulatory regime in early 2003. The Romanian state controls the remaining 44.99%.

In July 2005, it was announced that the government would publicly list all its shares in Romtelecom throughout 2006. However in November 2006, The Communication and IT Ministry demanded from the investment bank Credit Suisse First Boston (CSFB) the annulment of the financial consultancy contract signed for the privatisation of Romtelecom’s last shares. The decision to postpone Romtelecom’s listing on the stock market was based on the fact that several CSFB collaborators were involved in the huge energy-related privatisation scandal in Romania.

Romtelecom entered the Internet market in 2005, launching two broadband products – ‘ADSL express’ and ‘ClickNet Express’. However throughout 2005, DSL has remained a marginal technology and has been massively outperformed by optical fibre and cable technology. As of Q307, Romtelecom had about 3 million fixed line subscribers.

The mobile market in Romania is dominated by Orange Romania and Vodafone Romania. As of Q3 2007, Vodafone Romania had a 40.5% market share, while Orange Romania had a 43.9% market share. Cosmote, a new entrant in the Romanian telecom market which acquired 70% of Cosmorom in Q2 2005, was the third largest participant in the mobile market. By the end of Q307, Cosmote had gained a 13.3 % market share. Finally, Telemobil (trading under the name ZAPP), had a 2.4% market share. At the end of 2007, the number of mobile subscriptions in Romania reached 22 million – a 26% increase from the year before.

Vodafone and Orange were awarded the country’s first pair of 3G licenses in November 2004. Vodafone launched its 3G service in mid-2005 while Orange switched on its own high speed network early in 2006. In October 2006, Romania Cable Systems (RCS&RDS) and Telemobil won two remaining 3G licenses auctioned by the Romanian state. The outcome of the auction was a double surprise. Firstly, RCS&RDS is a cable operator without any mobile network operator experience. Secondly, Cosmote Romania, an established mobile operator with a 2G network covering over 97% of Romania's population, was not awarded a license.

RCS&RDS’s 3G service was launched commercially in December 2007, more than a year after the contest. To be able to compete with Vodafone and Orange, which both cover about 97% of the population, RCS&RDS will need to offer over 90% coverage. RCS&RDS announced that its 3G network will cover only 55% of population by mid-2008. Meanwhile Telemobil, acquired by Saudi Oger in Jan 2008, is going to launch 3G services in Q2 2008, initially covering 19 cities and later expanding to 110 cities by the end of 2008. During 2008, Telemobil will also expand its CDMA network.