ECONOMY

Romania’s telecoms market is set to benefit from end to monopoly, minister says; Romtelecom takes on watchdog

BUCHAREST (Reuters) – The opening-up of Romania’s telecoms market last year has given a big boost to the sector, which will see revenues rise by 28 percent to 4.6 billion euros in 2004, Communications Minister Dan Nica said yesterday. The ex-communist Balkan country, which hopes to join the EU in 2007, liberalized its fixed-line market last year, allowing any company to seek clients among its 22 million people. «In January (2003), the first operators entered the market of international calls, which led to a decrease of around 60 percent in tariffs,» Nica said in an interview. He said revenues from the fixed-line telephony market would be around 1 billion euros ($1.25 billion) this year, over 60 million euros more than in 2003, with firms already competing for market share in a lucrative business where penetration was still estimated at only about 20 percent, one of the lowest levels in Europe. Nica said tariffs for mobile phone calls had also been falling. This was because, since liberalization, firms could build their own radio transmission networks rather than rely on existing ones from the Romanian Radiocommunications Company or former fixed-line monopoly Romtelecom. He said Romania’s system, where companies willing to operate fixed-line telephony do not have to pay license fees, had led to as many as 1,850 firms seeking permission to offer the service. Substantially fewer companies would operate on the market, however, as newcomers would have to compete for investment funds and clients, he said. «I don’t expect more than 20 companies operating fixed-line telephony (across the country) in the end,» Nica said. He added that the number of fixed-line operators could be higher if some of them chose to supply services only to certain areas or towns, like the country’s 200 cable television providers, which have divided the territory among themselves. Two companies have started to offer the service in five big cities around the country but Nica said «an important number» of fixed-line operators were expected to enter the market this year. He said competition was not likely to hurt Romania’s former fixed-line monopoly, Romtelecom, majority-owned by Greece’s OTE, as market penetration of fixed-line services was low and long waiting lists gave scope for growth. «The newcomers’ market share will increase in 2004, but not necessarily by eating into Romtelecom’s market share,» he said. «Currently, there are around 1 million people on a waiting list to get a fixed-line phone.» Yesterday, Romtelecom, apparently worried about the effects of competition, announced it would sue Romania’s telecoms regulator ANRC for refusing to let it raise tariffs for line rental. ANRC twice rejected requests by Romtelecom last year to raise line rental tariffs by around 66 percent – or 2 euros – starting this year. «Romtelecom will also notify the European Commission, since ANRC does not respect European directives in this area,» Romtelecom said. The operator said it needed to raise tariffs for line rental to modernize and extend its telephone network and increase fixed-line penetration in Romania. ANRC said it stood by its decision.