Mobile Manoeuvres

Economic News

22 Jul 2010
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Although the privatisation of the country's main telecoms company is now apparently settled, Bulgaria's telecoms market is far from displaying signs of any tranquillity these days. With new moves on both the fixed-line and mobile phone front this month, the industry seems to be set for some heightened competition in the months ahead.

The beginning of April saw news that Viva Ventures, the ultimately successful winner of the bidding for a 65% stake in the Bulgarian Telecommunications Company (BTC), would have to wait to obtain the country's third GSM license. Whether it would be granted a license or not is up to the Communications Regulation Commission (CRC), though by April 2, this body had postponed any verdict in the case and had called instead for more information.

This must have been irksome for Viva, especially considering it had undertaken to pay an additional Lv54m for the licence in the deal that won it its share of BTC.

Additionally worrying too must have been the statement from CRC head Georgi Alexandrov on April 2 that his commission was not refusing to issue the licence, adding that there were no legal obstacles to doing so. Yet despite this, he said that the CRC had set additional conditions, and would make its final decision in a month-and-a-half at the earliest.

What these additional conditions are is not so clear, but there was a list of additional information the CRC would require before being able to pass judgement. These included demands for a report from the Competition Protection Commission (CPC) on whether the Lv54m million paid by Viva violated the principles of equality in competition.

This issue appears to have been raised by Bulgaria's second-ranking GSM operator, GloBul, which complained to the CRC that issuing the third GSM licence without a public tender might create the conditions for inequality.

The CRC also wants an opinion from the government on various clauses within the privatisation strategy for BTC. It also seeks clarification from the government over the details of the privatisation contract, to establish whether the third GSM licence was offered to Viva as part of the BTC deal or was in fact a separate arrangement.

The commission also wanted to know from the Ministry of Transport and Communications what the regulations are concerning how to differentiate between different types of mobile voice services with different technologies, and the issuing of different tariffs for such services. This is because BTC has a stake in Mobikom, which also offers a mobile voice service, but uses a different technology.

So Viva will have to wait. Meanwhile, BTC's market position is also coming under threat from another quarter - the country's largest mobile operator, Mobiltel. Reports began to circulate as the month began that the company was about to sever its ties to fixed-line operator BTC and establish its own fibre-optic cable network. The move, reportedly, is to save on high connection costs.

When its own network is complete - reportedly by as early as this time next year - it will end its relationship with BTC.

Most sector-watchers agree that BTC pricing levels are excessive in comparison to other European countries, with fees often twice as high as those in neighbouring states. In addition, the Mobiltel fibre-optic system - which is being built jointly with Siemens - will provide higher-quality abilities, enabling the company to offer customers many third-generation mobile services, as well as internet packages, data transfer and cable television.

The new network is set to cover the route Sofia-Plovdiv-Burgas-Varna-Rousse-Veliko Turnovo-Pleven-Vratsa-Montana-Sofia, although Mobiltel has also said it will provide a service eventually to all towns and villages in the country with populations of more than 600. The company also points out that it is undertaking a joint project with the Mountain Rescue Service to provide coverage of winter tourist venues such as Vitosha, Rila, Pirin, the Rhodopes and Stara Planina.

Meanwhile, there are also reports that Mobiltel itself may be about to be bought up. In a revival of previous interest, Telekom Austria is thought to be interested in restarting negotiations in the summer to buy a majority share in Mobiltel. The Austrians had tried to do this last October, but had cancelled negotiations when it became clear that only a minority stake would be on offer.

If a majority stake is now up for grabs, this may also revive interest from other international giants, such as Vodafone, TeliaSonera, Telenor and Orange, which have all expressed interest in the past.

All of which adds up to a sector seeing some major changes in the months ahead, as the telecoms market opens up. The hope is it will also lead to falling phone charges, and better services. That should at least make consumers smile.

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