ECONOMY

Romania issues tender for 3G licenses despite unpromising market outlook

BUCHAREST – Romania announced tenders yesterday for four 15-year third-generation (3G) mobile licences, while so far only one of the country’s four mobile phone operators has publicly announced that it will take part. The Communications Ministry said in a statement that offers were expected by October 29 and winners would be named in November. The telecommunications sector in the Balkan country, which hopes to join the European Union in 2007, has been extensively deregulated in recent years but analysts say it remains relatively underdeveloped by regional standards. Officials have said at least two companies had expressed interest in the licences but they did not say whether they were from Romania or from abroad. Of Romania’s operators only Orange Romania, majority-owned by France’s Orange, has confirmed it would participate. «Orange Romania is interested in buying a 3G licence and will take part in the tender,» a company official, who did not want to be named, told Reuters. Third-generation devices can handle Internet, video and other services, exceeding the quality of the current GSM system and allowing for faster data and image transmission. Officials predict good growth in the country of 22 million people, where the number of mobile telephone subscribers, at about 8 million, is double that of fixed-line subscribers. Few thousand customers But analysts say Romanians, with an average salary one-tenth of that in Western Europe, may not take to 3G so quickly. «Maybe there will be a few thousand who will want it,» telecommunications analyst Nicolae Oaca said. «But in Romania, most subscribers don’t have much money.» The ministry said bidders should have had a minimum turnover of 300 million euros ($362 million) in 2003. They will be chosen on the basis of their investment and development plans. The networks should cover the capital and 10 big cities of the bidders’ choice. Orange Romania had 3.95 million clients in the first six months of this year, 53 percent up from the same 2003 period, and revenues of 281 million euros ($339.4 million). An official of market leader MobiFon SA, a unit of Canada’s Telesystem International Wireless Inc, which has 4 million customers for its Connex service, said the firm was reviewing the conditions of the tenders and would decide later. Together, Connex and Orange have 96 percent of the market. Analysts said the other two mobile operators did not meet the government’s turnover requirements. They are Zapp, owned by Inquam, a wireless operator backed by US-based Qualcomm, and Cosmorom, which is owned by fixed-line operator Romtelecom, which in turn is owned by Greece’s OTE. The analysts said operators from abroad may want to enter. «Deutsche Telecom has started to look toward Eastern Europe for investment,» Oaca said. «And my feeling is that Telekom Austria does the same.» The winners must pay $35 million to the Romanian Defense Ministry for the transmission frequency. A first tranche of $10.5 million must be paid 120 days after the bidder wins, while the rest will be paid in equal tranches over five years.