Boston, MA -- (ReleaseWire) -- 04/11/2014 -- During the quarter ending September 2013, the Romanian market registered its largest total of net additions since Q309, posting an increase of 262,000 and reversing a steady trend of decline. BMI does not believe that this was the beginning of a new trend towards growth, and still expect a continuing pattern of slow growth or net losses to be the norm as penetration remains over 126%. The market benefits from a good level of competition between major international players, all of which had launched LTE services as of May 2013. With smartphone penetration reaching 27% of Orange's customers, we expect the development of mobile data and value-added services to become the key driver of growth for these players. The ongoing privatisation of incumbent Romtelecom will see the removal of the government from its stake, benefitting the fixed market with increased investment.
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- Inactive subscription discounting has been a drag on mobile subscriptions. However, it returned to the first subscription growth since H212 in Q313, following consecutive quarters of subscription loss in H113.
- The latest data from ANCOM show that, as of 30 June 2013, there were 8.2 million active broadband mobile internet subscriptions in Romania, up by 11% from end-2012, representing an overall penetration of 41%.
- Mobile ARPUs have continued to trend downwards following the brief stabilisation that accompanied the period of inactive subscription discounting. BMI expects price competition and IP substitution will contribute to gradual but ongoing declines in ARPU over the medium term.
Key Trends And Developments
Further rate cuts of around 70% were proposed in August 2013, following a public consultation from ANCOM. Starting from 2014, the maximum tariff for fixed call termination will drop from 0.67 to 0.15 eurocents/minute, while the maximum tariff for mobile call termination will plunge from 3.07 to 0.86 eurocents/minute. Local operators Cosmote, Orange and Vodafone all expressed their opposition to the cuts, claiming that reduced revenue and profits will limit future investment in next generation networks. A study by KPMG conducted on behalf of these companies found that the Romanian state will lose taxes worth EUR13mn per year and operators will lose total revenues of EUR206mn. Fixed-line provider RCS & RDS came out in support of the cuts, however.
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